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Unformatted text preview: zero yield error0.93.88.715.624.5 error sq 0.81 14.44 75.69 243.36 600.25 error min 934.55 disc d 1 1 1 1 1 1 PV(d) 101 104 109 116 125 140 pv(D)price 0.9 3.8 8.7 15.6 24.5 41 error ^ 2 0.81 14.44 75.69 243.36 600.25 1681 yield 934.55 forwards note: PV(pi) is calculated according to the sum of pis multiplied by cash flows of bonds. This is obtained by multiplying first column B6B10 by corresponding columns C,D,E,F,G. note: PV(d) is calculated according to the sum of d^t * c(t) over t, where c(t) is cash flow of bond at time t. Solver is used to find pi or d that makes PV equal to the price. Note that forwards rise faster than coupon yields or zero yields....
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This note was uploaded on 12/08/2009 for the course ECON 251 at Yale.
 '09
 GEANAKOPLOS,JOHN

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