Question: Problem 7. Yield-to-Maturities (10 points) (To do in class on May 3) Assume that the spot rates are as follows: Maturity Spot rate 1Yr 3.0%

Problem 7. Yield-to-Maturities (10 points) (To do in class on May

Problem 7. Yield-to-Maturities (10 points) (To do in class on May 3) Assume that the spot rates are as follows: Maturity Spot rate 1Yr 3.0% 2Yr 3.5% r 4.0% 4Yr 4.5% Compute the prices and yield-to-maturities of the following bonds: 3 (a) A zero-coupon bond with 3 years to maturity. (5 points) (b) A bond with coupon rate 5% and 4 years to maturity. (5 points)

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