termi 45 745.60 665.22 Saved E 00 6 00:41:32 a. Suppose that you buy today one...

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termi 45 745.60 665.22 Saved E 00 6 00:41:32 a. Suppose that you buy today one 3-year maturity zero-coupon bond with face value $1,000. How many 5-year maturity zeros you have to sell to make your initial cash flow equal to zero (specifically, what must be the total face value of those 5-year zeros b. What are the cash flows on this strategy in each year? c. What is the effective 2-year interest rate on the effective 3-year-ahead forward loan? d. Confirm that the effective 2-year forward interest rate equals (1 + f4) x(1 + f5)-1. You therefore can interpret the 2-year loar as a 2-year forward rate for the last two years. Alternatively, show that the effective 2-year forward rate equals (1 + y5)5 (1+ y3) - 1 Complete this question by entering your answers in the tabs below. Required A Required B b. What are the cash flows on this strategy in each year? (Negative value should be indicated by a minus sign. Leave cell blank if there is no effect. Round your answers to 2 decimal places.) Time 0 3 Cash Flow 5 < Required A Required B >> termi 45 745.60 665.22 Saved E 00 6 00:41:32 a. Suppose that you buy today one 3-year maturity zero-coupon bond with face value $1,000. How many 5-year maturity zeros you have to sell to make your initial cash flow equal to zero (specifically, what must be the total face value of those 5-year zeros b. What are the cash flows on this strategy in each year? c. What is the effective 2-year interest rate on the effective 3-year-ahead forward loan? d. Confirm that the effective 2-year forward interest rate equals (1 + f4) x(1 + f5)-1. You therefore can interpret the 2-year loar as a 2-year forward rate for the last two years. Alternatively, show that the effective 2-year forward rate equals (1 + y5)5 (1+ y3) - 1 Complete this question by entering your answers in the tabs below. Required A Required B b. What are the cash flows on this strategy in each year? (Negative value should be indicated by a minus sign. Leave cell blank if there is no effect. Round your answers to 2 decimal places.) Time 0 3 Cash Flow 5 < Required A Required B >>