If a zero coupon government strip matures in one year with a yield of 2.5% (equal to 97.5609% of the $1000
par value), with the following forward rates:
- 1-year that begins in one year at 2.8%
- 2-year that begins in one year at 2.9%
- 1-year that begins in two years at 3%
For this question - how would I figure out the yields for a bond (risk-free and zero coupon) that matures in two years versus one that matures in three years?
Also - how would I go about finding the current price AND the current yield-to-maturity of a risk-free bond that will mature in three years with a par value of $1000 at a coupon rate of 10%?
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