ield to maturities, par values and market prices for government securities (with annual interests) are given in the following table: Maturity (Years) Yield to maturity Par Value (K) Market Price (K) 1 3% 100 101.25 2 4% 100 103.50 3 5% 100 104.25 Assuming that the yields to maturities are equal to the coupon rates, calculate the one year, two year and three year spot rates.
ield to maturities, par values and market prices for government securities (with annual interests) are given in the following table: Maturity (Years) Yield to maturity Par Value (K) Market Price (K) 1 3% 100 101.25 2 4% 100 103.50 3 5% 100 104.25 Assuming that the yields to maturities are equal to the coupon rates, calculate the one year, two year and three year spot rates.
Chapter7: Types And Costs Of Financial Capital
Section: Chapter Questions
Problem 2EP
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QUESTION TWO
Yield to maturities, par values and market prices for government securities (with annual interests) are given in the following table:
Maturity (Years) |
Yield to maturity |
Par Value (K) |
Market Price (K) |
1 |
3% |
100 |
101.25 |
2 |
4% |
100 |
103.50 |
3 |
5% |
100 |
104.25 |
Assuming that the yields to maturities are equal to the coupon rates, calculate the one
year, two year and three year spot rates.
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