In reference to the yield curve data in the
table, calculate the 1 year rate 2 years from now. (Answer as a
percent. Enter only numbers and decimals in your response. Round to
4 decimal places.)
Homework Answers
We see that the 1 year rate 2 years from now is given as equal
to=(1+rate for 3 years)^3/(1+rate for 2
years)^2-1=1.055^3/1.056^2-1=5.3003%
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Consider the continuously compounded yield curve
.
Consider a 2-year $ 5000 bond that's redeemable at par and pays
semi-annual coupons at a rate of
%.
(i) Determine the bond's purchase price.
(ii) Determine the duration of the bond to 3 decimals.
y(T) 0.045-0.02e-0.57 C(2) -3
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