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1. You are given the following n-year forward rate: Year 0 : 3.0% Year 1: 4.4% Year 2: 4.8% Year 3: 5.6% Find the spot

1. You are given the following n-year forward rate:

Year 0 : 3.0%

Year 1: 4.4%

Year 2: 4.8%

Year 3: 5.6%

Find the spot rate: S1,S2,S3,S4.

2. For a four year $1,000 par bond with 5% annual coupon. Find the price of the bond using spot rate implied by the forward rate at problem 1.

3. Find the yield to maturity of the bond in problem 2.

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