Assume interest compounds semiannually. Suppose that the yield to maturities associated with zero-coupon treasury securities are...

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Assume interest compounds semiannually. Suppose that the yield to maturities associated with zero-coupon treasury securities are as follows (6 points): Term to Maturity (years) YTM (%) 0.5 05 8.25 1.0 8.00 1.5 7.50 2.0 7.00 2.5 6.50 3.0 5.00 3.5 4.50 4.0 5.00 a. Using the chart above, what is the price of a two-year bond with a par value of $100 that pays a coupon annually and has a 7% annual coupon rate? (3 points) b. What is the two-year forward rate one year from now? (3 points) Assume interest compounds semiannually. Suppose that the yield to maturities associated with zero-coupon treasury securities are as follows (6 points): Term to Maturity (years) YTM (%) 0.5 05 8.25 1.0 8.00 1.5 7.50 2.0 7.00 2.5 6.50 3.0 5.00 3.5 4.50 4.0 5.00 a. Using the chart above, what is the price of a two-year bond with a par value of $100 that pays a coupon annually and has a 7% annual coupon rate? (3 points) b. What is the two-year forward rate one year from now? (3 points)

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a Price of a twoyear bond with 7 annual coupon 100 par value Term to maturity 2 years YTM for 2yea... View the full answer