Problem

a. What is the formula for the value of a two-year, 5% bond in terms of spot rates?b. What...

a. What is the formula for the value of a two-year, 5% bond in terms of spot rates?


b. What is the formula for its value in terms of yield to maturity?


c. If the two-year spot rate is higher than the one-year rate, is the yield to   maturity greater or less than the two-year spot rate?

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