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7. Suppose current spot rates (yields to maturity on zero~ooupon bonds) are as follows: r1 = 4%, r2 = 4.25%, to; = 5%1 and r4

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7. Suppose current spot rates (yields to maturity on zero~ooupon bonds) are as follows: r1 = 4%, r2 = 4.25%, to; = 5%1 and r4 = 5.20%. Here rt is the yield~to~nraturity on the twyear zero coupon bond. (a) What is the rate that you can lock in now for lending between years 3 and 4'? Briey describe the transaction that allow you to lend at this rate. (b) What is the rate that you can lock in now for lending between years 1 and 4'? Briey describe the transaction that allow you to lend at this rate. (o) "What is the rate you can lock in now for lending between years 0 and 3'? Briey describe the transaction that allow you to lend at this rate

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