Question 2 Consider the following risk free T bill and coupon bonds available for sale in the bond market (assume annual coupons) Maturity (in years) Price Coupon rate 1 999 T bill (zero coupon bond) 2 1003 2 3 1008 3 5 Construct the term structure of interest rates for these three years Find forwa...

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Question 2 Consider the following risk-free T-bill and coupon bonds available for sale in the bond market

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Consider the following risk-free T-bill and coupon bonds available for sale in the bond market (assume annual coupons):

Maturity (in years)	Price	Coupon rate
1	999	T-bill (zero coupon bond)
2	1003	2%
3	1008	3.5%

Construct the term structure of interest rates for these three years.

Find forward rates between years 1 and 2, and between years 2 and 3.

Suppose that your company plans to issue a one-year zero-coupon bond in year 1 that will mature in year 2. What is the expected price of this bond?

Posted Date: May 19, 2024 01:16 AM

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Question 2 Consider the following risk-free T-bill and coupon bonds available for sale in the bond market

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