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| rev | Admin | (Created page with "'''Solution: B''' The price of a one-year bond for 1000 is <math>\frac{30}{1.021}+\frac{1030}{1.021^2}=1017.45</math>. Therefore, to match the payment at time 2 we need to invest <math>\frac{1500}{1030} 1017.45=1481.72</math> in the oneyear bond. The one-year bond gives a payment of <math>\frac{1500}{1030} 30=43.69</math> at time 0.5 . Therefore, the amount that needs to be invested in the six month zero coupon bond is <math>=\frac{2000-43.69}{1.0175}=1922.66</math>....") | Nov 20'23 at 22:43 | +584 |