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Chapter 5 Appendix Questions

Chapter 5 Appendix Questions - A.3 If the one-year spot...

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Questions and Problems A.1 The one-year spot rate is 10 percent and the two-year spot rate is 11 percent. a. What is the price of a two-year bond that pays an annual coupon of 6 percent? b. What is the yield to maturity of this bond? A. 2 The one-year spot rate is 10 percent and the two-year spot rate is 8 percent. What is the price of a two-year bond that pays an annual coupon of 5 percent?
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Unformatted text preview: A.3 If the one-year spot rate is 9 percent and the two-year spot rate is 10 percent, what is the one-year forward rate over the second year? A.4 Assume the following spot rates: Year Spot Rate (%) 1 5 2 7 3 10 a. Calculate the one-year forward rate over the second year. b. Calculate the one-year forward rate over the third year....
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