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\title{Derivatives Lab}
\author{Session 3}
\date{September 12, 2011}
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\begin{enumerate}

\item Suppose the coupon rate for a level coupon bond is the same as
the market rate.  Show that this bond will be sold at par.

\item Recall that the \emph{yield to maturity} of a level coupon bond
is the IRR of its cash flow.  Compute the yield to maturity of a
10-year level coupon bond sold at 75\% of par with a coupon rate of
10\% paid semiannually.

\item Plot the price vs.\ time to maturity for level coupon bonds with
annual coupon rates of 2\%, 6\%, and 12\% paid semiannually.  Assume a
yield of 6\% and a par value of EUR 1\,000.

\item Use the \texttt{timeit} module to compare the efficiency of
Newton's method, the secant method, and Brent's method for computing
the IRR of the test case from Lab Session 2. Repeat for $N=200$ and
$P=1\,500\,000$.

\end{enumerate}


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