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3. Treasury spot rates are as follows: 6 months = 4%; 1 year = 5%; 1.5 years = 6%; A 1.5 year, 4% Treasury note

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3. Treasury spot rates are as follows: 6 months = 4%; 1 year = 5%; 1.5 years = 6%; A 1.5 year, 4% Treasury note is trading at a market price of $96.50 and has a par value of $100. Calculate the actual price of the bond and what trade would you do knowing the market price. Be specific. Show computations for full credit

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