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14. Suppose that the zero rates, measured with continuous compounding, are as in the table below Maturity (years) 0.5 1.0 1.5 2.0 Zero rate (%

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14. Suppose that the zero rates, measured with continuous compounding, are as in the table below Maturity (years) 0.5 1.0 1.5 2.0 Zero rate (% continuously compounded) 4.0 4.8 6.0 6.8 A 2-year bond with a principal of $500 provides coupons at the rate of 7% per annum semiannually, Calculate the theoretical price of this bond (15p.)

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