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Problem 1 (14 points): Consider the following information about four bonds and assume they are priced correctly: Bond #1 Bond #2 Bond #3 Bond #4
Problem 1 (14 points): Consider the following information about four bonds and assume they are priced correctly: Bond #1 Bond #2 Bond #3 Bond #4 Time to maturity 0.5 1 20 20 Coupon rate 5% 9% 8% 4% Price 100.59 104.76 123.11 80.89 a) (2 points) Find a 6-month spot interest rate. Keep at least 6 decimal digits while performing your calculations b) (2 points) Find a 1-year forward interest rate. Keep at least 6 decimal digits while performing your calculations c) (2 points) Find a 1-year spot interest rate. Keep at least 6 decimal digits while performing your calculations d) (2 points) Find a 20-year spot interest rate. Keep at least 6 decimal digits while performing your calculations
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