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Question 5 You are given the following information about three bonds that pay annual coupons. Maturity (years) Coupon Annual effective yield 1 6.0% 14.000% 2

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Question 5 You are given the following information about three bonds that pay annual coupons. Maturity (years) Coupon Annual effective yield 1 6.0% 14.000% 2 7.0% 12.052% 3 8.0% 13.893% A loan arranged now. The loan commences in one year and lasts for one year. The interest rate on the loan is the one-year forward rate. Calculate the interest rate on the loan A 10.0% B 11.0% 12.0% D 14.0% E 18.1%

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