Question
Use the following information to answer three questions below (1 to 3): You have a list of several zero-coupon bonds, each with par value of
Use the following information to answer three questions below (1 to 3): You have a list of several zero-coupon bonds, each with par value of $1,000. Assume expectations hypothesis.
| Maturity in years | Price | YTM |
| 1 2 3 4 | 930 890 850 750 | 7.00% 6.00% 5.00% 6.00% |
1. Calculate the one year forward rates in the second year (f2).
2. Calculate the one year forward rates in the third year (f3).
3. Calculate the one year forward rates in the fourth year (f4).
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Basic Finance An Introduction To Financial Institutions, Investments And Management
Authors: Herbert B Mayo
9th Edition
0324322291, 9780324322293
