Sample exam 43

[felipe_R]

I see why they do Pzero(1.03)^(1/3), buy I dont get why they sutract
Asub(1/3).

Since the price includes the PV of coupons, wouldnt moving the price fwd in time be enough?

[Kazodev]

Are you sure they subtract a_1/3? seems like they do s_1/3 = [(1.03)^(1/3) - 1]/[1.03-1]... And also they subtract it because they're asking for the market value of the bond, so you have to strip it off the coupon(accumulated) at that time I believe.