The following table shows the prices of a sample of Treasury strips. Each strip makes a single

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The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity. Calculate the interest rate offered by each of these strips.

Years to MaturityPrice, %

1............................96.852%

2...............................93.351

3...............................89.544

4...............................85.480

a. What is the 1 -year interest rate?

b. What is the 4-year rate?

c. Is the yield curve upward-sloping, downward-sloping, or flat?

d. Is this the usual shape of the yield curve?

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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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Question Posted: Jun 30, 2016 09:12 AM

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The following table shows the prices of a sample of Treasury strips. Each strip makes a single

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a r 325 b r 400 c In this c...View the full answer

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