A Government of Canada bond was issued on January 1st, 2001 with a yield-to-maturity of 11%. At the time the term structure was flat. The bond’s coupon rate is 10%. The bond was issued on January 1st, 2001 and will mature on January 1st, 2014. The annual coupons are due on January 1st of each year until maturity. You want to purchase the bond on January 1st, 2008.
c) Calculate your purchase price for the bond on January 1st, 2008. The term structure of interest rates on January 1st, 2008 was as follows:
Years to Maturity | Yield to Maturity
1 | 5%
2 | 6%
3 | 6.5%
4 | 7.0%
5 | 7.5%
6 | 8.0%
I am not sure on how to start with this question because its very different from the other questions
Ty for your help
c) Calculate your purchase price for the bond on January 1st, 2008. The term structure of interest rates on January 1st, 2008 was as follows:
Years to Maturity | Yield to Maturity
1 | 5%
2 | 6%
3 | 6.5%
4 | 7.0%
5 | 7.5%
6 | 8.0%
I am not sure on how to start with this question because its very different from the other questions
Ty for your help