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Question 2.18 marks Suppose you observe two bonds that pay quarterly coupons: Bond A : pays a coupon of 10 every quarter, matures in 6

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Question 2.18 marks Suppose you observe two bonds that pay quarterly coupons: Bond A : pays a coupon of 10 every quarter, matures in 6 months. PA=103. Bond B : pays a coupon of 7 every quarter, matures in 3 months. PB=101. Plot the current term structure. Find the 3 -months rate that you expect to see in 1 quarter

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