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Consider the following prices (per $100 face value) of zero-coupon bonds with different maturities. Maturity (in years) 1 2 3 4 Price 97 95
Consider the following prices (per $100 face value) of zero-coupon bonds with different maturities. Maturity (in years) 1 2 3 4 Price 97 95 93 91 Find the term structure resulting from these bonds, and use it to calculate the fair price of the financial product with the following cashflows: Time (End of Year) 1 2 3 4 Cashflow -60 -50 80 70 (Be sure to show all your steps and clearly circle your final answer).
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