Hi, I am an economics student at LSE and i have difficulty with the fundamental concept of bond pring usinf discounted cash flows.
Here is a simple example illustrated in my textbook:
two year bond
5% coupon
1000 par/face value
1year spot rate 8%
2 year spot rate %
My interpretation of...
Hi, I am by no means an elite trader but i am trying to learn through my academic courses and indepedndent learning.
Question
current stock price 100
Every 3 month period it will increase by either 25% or fall by 20%
6 month call strike price of 90
Risk free 3 month IR 1%
If the...