Assume the following spot rate curve: Years ...
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- Assume the following spot rate curve:
| Years | 0.5 | 1.0 | 1.5 | 2.0 | 2.5 |
| Rate | 7.50 | 7.75 | 8.00 | 8.00 | 8.00 |
- If all bonds were priced consistently with this curve, what would be the price of a two-year semiannual, 14% coupon security? Why?
- What is the forward rate between years 1 and 2?
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