Question: You have been provided with the following information zero coupon bonds with $1000 face value. Maturity - semi -annual periods semi-annual spot rates 1 4.25

You have been provided with the following information zero coupon bonds with $1000 face value.

Maturity - semi -annual periods

semi-annual spot rates

1

4.25

2

4.15

3

3.95

4

3.70

5

3.50

6

3.25

7

3.05

8

2.90

Compute the forward interest rates.

Graph the yield curve.

Explain the factors that account for the shape of the curve.

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