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An individual is investing in a market where spot rates and forward rates apply. In this market, if at time t = 0 he agrees
An individual is investing in a market where spot rates and forward rates apply.
In this market, if at time he agrees to invest for two years, he will receive at time years. Alternatively, if at time he agrees to invest at time for either one year or two years, he will receive or at times and respectively.
Calculate the price per nominal that the individual should pay for a fixedinterest bond bearing annual interest of and is redeemable after years at State your answer at decimal places.
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