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Suppose you are given the following information about the default-free, coupon-paying yield curve: Maturity (years) 1 2 3 4 Coupon rate (annual payment) 0.00% 11.00%

Suppose you are given the following information about the default-free, coupon-paying yield curve:

Maturity (years) 1 2 3 4

Coupon rate (annual payment) 0.00% 11.00% 6.00% 12.00%

YTM 1.056% 4.484% 6.363% 5.153%

a. Use arbitrage to determine the yield to maturity of a two-year zero-coupon bond.

b. What is the zero-coupon yield curve for years 1 through 4?

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