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3- Suppose that a two-year bond with a principal of $100 provides coupons at the rate of 6% per annum semiannually. Suppose that the zero-rates

3- Suppose that a two-year bond with a principal of $100 provides coupons at the rate of 6% per annum semiannually. Suppose that the zero-rates are

Maturity (years)

Zero Rate (%)

0.5

5.0

1.0

5.8

1.5

6.4

2.0

6.8

  • What is the bond's yield to maturity expressed with the continuous compounding?

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6.76%, 5.3%, 6.54%, 7.05%. Please show how to do this exercise with a financial calculator

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