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Question 2 (4 marks) The term structure of effective annual yield rates for zero coupon bonds is given as follows: 1- and 2-year maturity, 10%;

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Question 2 (4 marks) The term structure of effective annual yield rates for zero coupon bonds is given as follows: 1- and 2-year maturity, 10%; 3- and 4-year maturity, 12%. The price of a 5-year bond with face amount 100, and annual coupons at rate 5% is $73.68. (a) Find i and 14,1 (b) Express, in words, what i1 means

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