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Homework answers / question archive / Suppose that the prices of zero-coupon bonds with various maturities are given in the following table
Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) 1 2 3 4 5 Price $ 955.93 883.39 818.92 755.80 659.96
b. How could you construct a 1-year forward loan beginning in year 3? (Round your Rate of synthetic loan answer to 2 decimal places.) Face value Rate of synthetic loan 8.35% c. How could you construct a 1-year forward loan beginning in year 4? (Round your answers to 2 decimal places.) Face value Rate of synthetic loan 14.52 %
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