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Consider a yield curve defined by the following equation: ik = 0.08 + 0.003k 0.001k^2 where ik is the annual effective rate of return for
Consider a yield curve defined by the following equation:
ik = 0.08 + 0.003k 0.001k^2 where ik is the annual effective rate of return for zero-coupon bonds with maturity of k years.
Let j be the one-year effective rate during the 5th year that is implied by this yield curve.
Calculate j.
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