Question: The zero rates for 1 - , 2 - , 3 - year are 5 % 7 % and 8 % , all continuously compounded.
The zero rates for year are and all continuously compounded. Also, the current price of a year with coupon rate bond is the principle amount of the bond is $
Calculate the year zero rate
Draw the yield curve implied by the zero rates
Calculate and explain the meaning of the forward rate f
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