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What is the .5 year zero rate (also known as spot rate) give that the information for the following .5 year, 1 year, and 1.5
What is the .5 year zero rate (also known as "spot rate") give that the information for the following .5 year, 1 year, and 1.5 year bonds: NOTE: The .5&1 year bonds are zero-coupon. The 1.5 year bond has a $5.00 coupon which is paid semi-annually (in 2 increments of $2.50, each six-months apart). HINT: You must solve recursively as shown in the lecture (first, you have to solve for the .5 year zero rate, then the 1 year zero rate, then the 1.5 year zero rate) \begin{tabular}{l} .980% \\ \hline .991% \\ \hline 1.001% \\ \hline 1.003% \\ \hline 1.005% \end{tabular}
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