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You have the following future short rates on T-bills: use 1000 par for all questions Year span One year future short rate 1. 0-1 1-2

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You have the following future short rates on T-bills: use 1000 par for all questions Year span One year future short rate 1. 0-1 1-2 2-3 3-4 4-5 1.4% 1.6% 1.8% 1.9% 1.95% What is the yield to maturity of a 3 year zero coupon bond? A. What is the cost of a two year zero coupon bond? B. What is the price of a 2 year 5% coupon bond? (Remember to discount each payment at the appropriate rate) C. If you want to invest $300 in two years at the 3"d year's future short rate, what car you do today using T-bills to lock this in? (This means it costs you nothing today but 300 at time one) D

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