The annualized yield to maturity for a zero-coupon

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The annualized yield to maturity for a zero-coupon U.S. Treasury strip having one year to maturity is currently 1.5 percent. The annualized yield to maturity for a zero-coupon U.S. Treasury strip having two years to maturity is 4.25 percent. Determine the

a. forward rate of interest for a one-year period that begins in one year

b. price of a two-year bond with a par value of $1000 making annual coupon payments based on a coupon rate of 10 percent (be sure to assume there is one coupon payment per year for the full amount of the yearly coupon interest on the bond).

c. what is the yield to maturity for the two-year bond with a 10 percent annual coupon rate.

Reference no: EM131495278

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