Question: Suppose that the forward rate is r(t) = 0.032 + 0.001t + 0.0002t2. (a) What is the 5-year continuously compounded spot rate? (b) What is

Suppose that the forward rate is r(t) = 0.032 + 0.001t + 0.0002t2.

(a) What is the 5-year continuously compounded spot rate? (b) What is the price of a zero-coupon bond that matures in 5 years?

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