Estimate zero rates for terms

Reference no: EM132182364

Question - The nation of Meltoria uses the same bond pricing conventions as the US, except that in Meltoria, all half-years have the same number of days and bond transactions are settled on the trade date. Each of the following four Meltorian government bonds has just made a half-yearly coupon payment.

Bond	Term (months)	Coupon rate pa	Yield pa
A	6	12%	6.010%
B	12	9%	6.674%
C	18	6%	7.056%
D	24	2%	7.260%

Use the bootstrap method to estimate zero rates for terms of 6, 12, 18 and 24 months. Show your calculations.

Reference no: EM132182364

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