10) Consider now the following 2 bonds issued by the same borrower, with an identical...
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10) Consider now the following 2 bonds issued by the same borrower, with an identical structure but with different coupons, c and e' with e' c. In which bonds would you consider investing your money? Why? 121 1+c 11) Which one of these 2 bonds should one buy, which one should one sell, and in what proportions in order to replicate a bond giving zero cash flow from year I to year n-1 but only one single cash flow at year n? (this combination of 2 bonds is called a synthetie zero coupon bond and is used when investors cannot find in the market bonds such as E and F above) 12) What would be the price of this combination knowing the prices and Pof each of the bonds which were used to create it
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