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You want to calculate the first two components of the term structure vector (i.e., i, and iz). You have the following information: a 2 year
You want to calculate the first two components of the term structure vector (i.e., i, and iz). You have the following information: a 2 year riskless bond with a face value of $1000 paying an annual coupon of $70 (at the end of each year) is selling for $899.57 and another 2 year riskless bond (again with a face value of $1000) paying an annual coupon of $40 is currently selling for $848.38. What are the values for i, and i, implied by these bond prices
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