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The following table summarizes prices of various default-free zero-coupon bonds ($100 face value): Maturity (years) Price (per $100 face value) 1 $96.81 2 $92.44 3
The following table summarizes prices of various default-free zero-coupon bonds ($100 face value): Maturity (years) Price (per $100 face value) 1 $96.81 2 $92.44 3 $87.89 4 $83.25 5 $78.19 a. Compute the yield to maturity for each bond. b. Plot the zero-coupon yield curve (for the first five years). c. Is the yield curve upward sloping, downward sloping, or flat? Note: Assume annual compounding. a. Compute the yield to maturity for each bond. The yield on the 1-year bond is %. (Round to two decimal places.) The yield on the 2-year bond is %. (Round to two decimal places.) The yield on the 3-year bond is %. (Round to two decimal places.) The yield on the 4-year bond is %. (Round to two decimal places.) The yield on the 5-year bond is %. (Round to two decimal places.)
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