Question: 3.13 Consider the accumulation function a(t) = 1 + 0.05t. (a) Compute the spot rates of interest for investments of 1, 2 and 2.5 years.

3.13 Consider the accumulation function a(t) = 1 + 0.05t. (a)

3.13 Consider the accumulation function a(t) = 1 + 0.05t. (a) Compute the spot rates of interest for investments of 1, 2 and 2.5 years. (b) Derive the accumulation function for payments due at time 2, assuming the payments earn the forward rates of interest. (c) Calculate the forward rates of interest for a payment due at time 2 with time to maturity of 1, 2 and 2.5 years

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