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Consider the following bonds with Face Value=100: Maturity Coupon Price 1 0 98 2 2.5% 102 3 0 94 4 4% 100 a. Find all
Consider the following bonds with Face Value=100:
Maturity | Coupon | Price |
1 | 0 | 98 |
2 | 2.5% | 102 |
3 | 0 | 94 |
4 | 4% | 100 |
a. Find all the forward rates implied by the term structure of the above 4 bonds.
b, Using the above bonds, construct a forward contract that will pay you the same rate as 2f2.
c. Using the above bonds, construct a contract that will allow you to invest 100$ a year from now for one year at the 1f1 rate.
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