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Suppose that you have the following information about interest rates:

The price of a zero coupon risk-free bond maturing in one year is $994

The price of a zero coupon risk-free bond maturing in two years is $983

The price of a zero coupon risk-free bond maturing in three years is $970

First, calculate the yield to maturity for the three bonds. Second, calculate each of the one year forward rates. Third, draw a diagram that shows the term structure of interest rates for these bonds showing both YTM and forward interest rates.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92757430

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