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For the following question, assume that the current continuous spot rates are j 1 2 3 5 8 10 sj 0.01 0.014 0.016 0.02 0.025
For the following question, assume that the current continuous spot rates are j 1 2 3 5 8 10 sj 0.01 0.014 0.016 0.02 0.025 0.028 where time is measured in years. Question 2. (i) Use this data to find the current prices of 1,2,3,5, 8 and 10 year Zero Coupon bonds. (ii) What are the forward rates for three year bonds 2 years from now and 5 years from now? Are they higher or lower than now? (iii) What are the forward rates for five year bonds 3 years from now and 5 years from now? Are they higher or lower than now? (iv) What are the minimum spot rates for 6 and 7 year ZC bonds based on this data and the no-arbitrage inequalities. (v) Use the no arbitrage inequality to find the maximum possible spot rates for 6 and 7 year ZC bonds based on the values of s8 and s10. 
For the following question, assume that the current continuous spot rates are j 1 2 3 5 8 10 S; 0.01 0.014 0.016 0.02 0.025 0.028 where time is measured in years. Question 2. (i) Use this data to find the current prices of 1,2,3,5, 8 and 10 year Zero Coupon bonds. (ii) What are the forward rates for three year bonds 2 years from now and 5 years from now? Are they higher or lower than now? (iii) What are the forward rates for five year bonds 3 years from now and 5 years from now? Are they higher or lower than now? (iv) What are the minimum spot rates for 6 and 7 year ZC bonds based on this data and the no-arbitrage inequalities. (v) Use the no arbitrage inequality to find the maximum possible spot rates for 6 and 7 year ZC bonds based on the values of 8g and $10. For the following question, assume that the current continuous spot rates are j 1 2 3 5 8 10 S; 0.01 0.014 0.016 0.02 0.025 0.028 where time is measured in years. Question 2. (i) Use this data to find the current prices of 1,2,3,5, 8 and 10 year Zero Coupon bonds. (ii) What are the forward rates for three year bonds 2 years from now and 5 years from now? Are they higher or lower than now? (iii) What are the forward rates for five year bonds 3 years from now and 5 years from now? Are they higher or lower than now? (iv) What are the minimum spot rates for 6 and 7 year ZC bonds based on this data and the no-arbitrage inequalities. (v) Use the no arbitrage inequality to find the maximum possible spot rates for 6 and 7 year ZC bonds based on the values of 8g and $10
For the following question, assume that the current continuous spot rates are j 1 2 3 5 8 10
sj 0.01 0.014 0.016 0.02 0.025 0.028
where time is measured in years.
Question 2. (i) Use this data to find the current prices of 1,2,3,5, 8 and 10 year Zero Coupon bonds.
(ii) What are the forward rates for three year bonds 2 years from now and 5 years from now? Are they higher or lower than now?
(iii) What are the forward rates for five year bonds 3 years from now and 5 years from now? Are they higher or lower than now?
(iv) What are the minimum spot rates for 6 and 7 year ZC bonds based on this data and the no-arbitrage inequalities.
(v) Use the no arbitrage inequality to find the maximum possible spot rates for 6 and 7 year ZC bonds based on the values of s8 and s10.
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Fundamentals Of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
5th Edition
0135811600, 978-0135811603
