Question: Use the data in the following table, determine the zero rates for maturities of 6 months, 1 year, and 18 months expressed in terms of

  1. Use the data in the following table, determine the zero rates for maturities of 6 months, 1 year, and 18 months expressed in terms of continuous compounding. Bond 2 and 3 have semiannual coupon payments.

Bond

Number

Bond Principal

Time to maturity

(years)

Annual Coupon

Bond Price

1

100

0.5

0

97

2

100

1.0

7

102

3

100

1.5

9

103

Please fill in the following table and show your work.

Time (years)

Annual Zero Rate

(continuous compounding)

0.5

1

1.5

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