4. Three bonds each paying annual coupons in arrears of 6% and redeemable at $103 per $100 nominal reach their redemption dates in exactly one, two and three years' time, respectively. The price of each bond is $97 per $100 nominal. (8) Calculate the gross redemption yield of the 3-year bond. (b) Calculate the one-year and two-year spot rates implied by the information given. This question is Subject CT1, April 2013, Question 3. (i) GRY of the three-year bond The equation of value for the three-year bond is: 97=6v+6v2+10913 [1] This equation can be solved by goal seek or solver in Excel. -Insert a guess for I in a cell. Calculate v as a function of I. -Code up the formula 6v+6v*2+109v^3 in a cell. -Goal seek to make the formula=97 by changing the I cell. Answer is 8.09%