Sketch the graph of the price of the coupon bond in Examples 2.9 and 2.10 as a function of time.
Question 2.32: Sketch the graph of the price of the coupon bond in Examples...
The time t price of the coupon bond in Examples 2.9 and 2.10 is
10e^{r(t−1)} + 10e^{r(t−2)} + 10e^{r(t−3)} + 10e^{r(t−4)} + 110e^{r(t−5)} if 0 ≤ t < 1,
10e^{r(t−2)} + 10e^{r(t−3)} + 10e^{r(t−4)} + 110e^{r(t−5)} if 1 ≤ t < 2,
10e^{r(t−3)} + 10e^{r(t−4)} + 110e^{r(t−5)} if 2 ≤ t < 3,
10e^{r(t−4)} + 110e^{r(t−5)} if 3 ≤ t < 4,
110e^{r(t−5)} if 4 ≤ t < 5,
The graph is shown in Figure S.2.
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