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Problem 1 Excel Problem. Suppose that the one year interest rate is 4% APR and the two year interest rate is 8% APR, both

Problem 1 Excel Problem. Suppose that the one year interest rate is 4% APR and the two year interest rate is 8% APR, both compounded annually. (a) Compute the coupon rate for a par coupon bond paying annual coupons. (b) Compute the yield to maturity of a two year coupon bond paying 12% coupons annually. (c) Repeat (a) and (b) assuming that the term structure is flat at 2% APR compounded annually.

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