Question: Please note that it is continuous compounding. You are given the following interest rate information y2,4 = 2%, 0,4 = 3% and y0,1 = 6%.
Please note that it is continuous compounding.
You are given the following interest rate information y2,4 = 2%, 0,4 = 3% and y0,1 = 6%. The questions below should be solved using continuous compounding. (a) Determine today's price of a two-year bond that pays $5000 in 1 year, and $105000 in 2 years. (b) Find y1,2- (c) Can you find y2,3 and Y3,4 ? If so, state them, if not, give a formula that you would use to calculate y2,3 and the additional data you would need to do so. You are given the following interest rate information y2,4 = 2%, 0,4 = 3% and y0,1 = 6%. The questions below should be solved using continuous compounding. (a) Determine today's price of a two-year bond that pays $5000 in 1 year, and $105000 in 2 years. (b) Find y1,2- (c) Can you find y2,3 and Y3,4 ? If so, state them, if not, give a formula that you would use to calculate y2,3 and the additional data you would need to do so
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