Suppose there are three zero-coupon bonds that are identical in all respects except maturity. Each bond has
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Suppose there are three zero-coupon bonds that are identical in all respects except maturity. Each bond has a face value of $10 million. One of them matures a year from now and is currently selling at $9,523,809. The other matures 2 years from now and is currently selling at $8,734,386. The third matures 3 years from now and is currently selling at $7,513,148. Compute the YTM for each of the three bonds, plot the yield curve (assuming that you can interpolate smoothly), and compute the available forward rates.
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Related Book For
Contemporary Financial Intermediation
ISBN: 9780124052086
4th Edition
Authors: Stuart I. Greenbaum, Anjan V. Thakor, Arnoud Boot
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