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Suppose we are given the following yield curve (assume the rates are expressed in semi-annual compounding.) Term (months) rate 4.0% 5.0% 5.5% 6.0% 6

Suppose we are given the following yield curve (assume the rates are expressed in semi-annual compounding.) Term (months) rate 4.0% 5.0% 5.5% 6.0% 6 12 18 24 (a) Find the price of a 2-year 6% coupon bond paying semi-annual coupons. (Assume a face value of $1000) (b) Find the price of the bond in part (a) six months later, assuming the yield curve does not change.

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