Question: 11. (Running PV example) A (yearly) cash flow stream is x = (-40, 10, 10, 10, 10, 10, 10). The spot rates are those of

11. (Running PV example) A (yearly) cash flow stream is x

= (-40, 10, 10, 10, 10, 10, 10). The spot rates are

11. (Running PV example) A (yearly) cash flow stream is x = (-40, 10, 10, 10, 10, 10, 10). The spot rates are those of Exercise 2. (a) Find the current discount factors do,k and use them to determine the (net) present value of the stream. (b) Find the series of expectations dynamics short-rate discount factors, and use the running present value method to evaluate the stream. the (yearly) spot rate curve s = (5.0,5.3,5,6,5.8,6.0,6.1), fi year. 11. (Running PV example) A (yearly) cash flow stream is x = (-40, 10, 10, 10, 10, 10, 10). The spot rates are those of Exercise 2. (a) Find the current discount factors do,k and use them to determine the (net) present value of the stream. (b) Find the series of expectations dynamics short-rate discount factors, and use the running present value method to evaluate the stream. the (yearly) spot rate curve s = (5.0,5.3,5,6,5.8,6.0,6.1), fi year

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