Question: Question 3 Table 1 contains yields and durations for three fifteen year bonds. The three coupon rates for these bonds are 0%, 3.5% and 7%.

Question 3 Table 1 contains yields and durations for three fifteen

Question 3 Table 1 contains yields and durations for three fifteen year bonds. The three coupon rates for these bonds are 0%, 3.5% and 7%. a) Which coupon rate belongs to which bond? b) What is the shape of the term-structure of spot rates underlying the valuation of these bonds? Table 1: Bond yields and durations [4 marks]

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