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Exercise 5 (2 marks). Consider an annuity starting at time 0 that pays 1 each year for M years. Assume the annually compounded zero rate

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Exercise 5 (2 marks). Consider an annuity starting at time 0 that pays 1 each year for M years. Assume the annually compounded zero rate is rA for all maturities T 1,..., M In an example in class, we found that the value of this annuity at its starting time 0 is TA Find the value of the annuity at time t, where 0

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