Calculate the market price of annual coupon bullet bond

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Reference no: EM132064713

Years Spot Rate (EAY) 1 r0,1 = 4.85% 2 r0,2 = 5.50% 3 r0,3 = 6.00% 4 r0,4 = 6.45%

Using the effective annual spot rates above calculate the market price of a 4 year 6% annual coupon bullet bond then Estimate the return, in percentage terms, from carry/roll over the next year assuming that spot rates remain unchanged over the year.

(Remember to include the coupon received in one year )

Please how all work, and the carry roll equation.

Reference no: EM132064713

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