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Suppose that a default-free, one-year, zero coupon bond with face value of $1000 is trading at $910, and a default-free, two-year, zero-coupon bond with face
Suppose that a default-free, one-year, zero coupon bond with face value of $1000 is trading at $910, and a default-free, two-year, zero-coupon bond with face value $1000 is trading at $800. You would like to issue a default-free, two-year coupon bond at par (with face value $1000). [ Select] (a) The one year spot rate ro(1) is %. (b) The two year spot rate ro(2) is [Select] (c) The coupon rate for the new issue is [ Select] %. %
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