What is the yield to maturity for three-year coupon bond

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Reference no: EM13721968

Suppose you observe a 1-year zero-coupon Treasury security trading at a yield to maturity of 5%. You also have a 2-year T-note with a 6% coupon trading at a yield to maturity of 5.5%. And, finally, you observe a risk-free 3-year annuity with an annuity yield (a3) of 5.68%. a. Assuming annual coupon payments, what are the 2-year (y2) and 3-year (y3) spot rates? b. What is the yield to maturity (YTM) for a three-year 5% coupon bond?

Reference no: EM13721968

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