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A. Given the following spot rate curve: Spot Rate 1 yr zero = 9.5096 2-yr.zero - 8.25% 3.yr zero = 8.0096 4-yr zero - 7.7596

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A. Given the following spot rate curve: Spot Rate 1 yr zero = 9.5096 2-yr.zero - 8.25% 3.yr zero = 8.0096 4-yr zero - 7.7596 5.yr zero - 7.7596 What will be the present value of a five-year, 9% annual coupon rate bond? If the bond is currently trading at $1025, is it undervalued or overvalued? Would you buy or sell this bond? B. The one-year spot rate is 5% and the two-year spot rate is 6.5%. What is the one year forward rate starting one year from now? (6+4 = 10)

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