Bond pricing To calculate the cash price of a bond we discount each cash flow at the appropriate zero rate o In our example, the theoretical price of a two year bond providing a 6%coupon semiannually is 0.05×0.5 +3e 0.058×1.0 0.064×1.5 +3e +103e 0.068×2.0 98.39 Options, Futures, and other Derivatives 8th Edition Copyright o John C. Hull 2012 14Bond Pricing To calculate the cash price of a bond we discount each cash flow at the appropriate zero rate In our example, the theoretical price of a two￾year bond providing a 6% coupon semiannually is Options, Futures, and Other Derivatives 8th Edition, Copyright © John C. Hull 2012 14 3 3 3 103 98 39 0 05 0 5 0 058 1 0 0 064 1 5 0 068 2 0 e e e e −  −  −  −  + + + = . . . . . . . .