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The following table summarizes prices of various default-free zero-coupon bonds ($100 face value): (Click on the following icon in order to copy its contents
The following table summarizes prices of various default-free zero-coupon bonds ($100 face value): (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) Price (per $100 face value) 1 $95.51 a. Compute the yield to maturity for each bond. 2 3 4 5 $91.05 $86.38 $81.65 $76.51 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.)
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