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Exercise 2. Suppose that the no-arbitrage price of 1,000 worth of zero-coupon bonds with ma- turities 1 and 3 years are respectively 931 and 785.

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Exercise 2. Suppose that the no-arbitrage price of 1,000 worth of zero-coupon bonds with ma- turities 1 and 3 years are respectively 931 and 785. Calculate: (a) The spot rates s and $3. (b) The 2-year forward rate f1,3

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