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Problem #12: Consider the following effective annual term structure: One year maturity is 10.07%, two year maturity is [3 marks] 12.39%, three year maturity is

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Problem #12: Consider the following effective annual term structure: One year maturity is 10.07%, two year maturity is [3 marks] 12.39%, three year maturity is 12.92% and five year maturity is 15.15%. The price of a 5-year bond with face amount $298.32 and annual coupons at rate 7.94% is $231.57. Find the 4 year forward effective annual interest rate io(4,5). (A) 35.12% (B) 34.86% (C) 35.25% (D) 34.99% (E) 35.38% Problem #12: Select

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