Question
There are three bonds trading in the market. These bonds are issued by one Energy company. The bonds are very liquid. Investors can buy or
There are three bonds trading in the market. These bonds are issued by one Energy company. The bonds are very liquid. Investors can buy or short-sell them. The following table shows the current price of the bonds and their three-year cash flows.
| Price (Today) | End Year | End Year | End Year |
| 0 | 1 | 2 | 3 |
| 143 | 0 | 30 | 180 |
| 135 | 60 | 0 | 160 |
| 105 | 20 | 20 | 120 |
1. What is the YTM of each Bond? 2. What are the spot rates implied from these bonds?
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett
7th Edition
0073530751, 9780073530758
