Calculate the yield to maturity for three bonds

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Reference no: EM131918767

Suppose that you have the following information about interest rates:

The price of a zero coupon risk-free bond maturing in one year is $994

The price of a zero coupon risk-free bond maturing in two years is $983

The price of a zero coupon risk-free bond maturing in three years is $970

First, calculate the yield to maturity for the three bonds. Second, calculate each of the one year forward rates. Third, draw a diagram that shows the term structure of interest rates for these bonds showing both YTM and forward interest rates.

Reference no: EM131918767

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