What is the one-year interest rate

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Reference no: EM133040255

Question - The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity.

Years to Maturity

Price, (% of face value)

1

98.052%

2

94.551

3

90.744

4

86.680

Required -

a. What is the 1-year interest rate?

b. What is the 2-year interest rate?

c. What is the 3-year interest rate?

d. What is the 4-year interest rate?

e. Is the yield curve upward-sloping, downward-sloping, or flat?

f. Is this the usual shape of the yield curve?

Reference no: EM133040255

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