Bond A is a 2-yr bond (with 2 years left) with $100 face value, offering a 10%
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Bond A is a 2-yr bond (with 2 years left) with $100 face value, offering a 10% coupon per annum (paid semiannually); the price of Bond A is $95. Bond B is a 2.5-yr bond (with 2.5 years left) with $100 face value, offering a 5% coupon per annum (paid semiannually); the price of Bond B is $93. The 6-month forward rate starting in 2 years is 8% per annum (stated with continuous compounding). Find the 2.5 year zero rate.
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25 Year Zero rate 807 Explanation Step 1 Calculation of Semi Annual YTM for 1st 2 year Bo... View the full answer
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