Question: Practice Problem: Consider the following information three bonds and assume they are priced correctly: Bond 1: (Time to maturity: 0.5), Coupon rate: 6%, Price 100.49

Practice Problem:

Consider the following information three bonds and assume they are priced correctly:

Bond 1: (Time to maturity: 0.5), Coupon rate: 6%, Price 100.49

Bond 2: (Time to maturity: 1), Coupon rate: 8%, Price 102.55

Bond 1: (Time to maturity: 1.5), Coupon rate: 7%, Price 101.68

a) Find discount factor d(1.5). Keep at least 4 decimal digits while performing your calculations

b) ) Find forward rate r(1.5). Keep at least 4 decimal digits while performing your calculations

c) Find the price of a 10% coupon bond maturing at t=1.5. Round your answer to the nearest cent

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