QUESTION FOUR (a) Discuss the three theories of the term structure of interest rates. Include...

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QUESTION FOUR (a) Discuss the three theories of the term structure of interest rates. Include in your iscussion the differences in the theories and advantages/disadvantages of each (9 marks) (b) Explain what the following terms mean Which of these is observable today? spot rate, short rate and forward rate. (8 marks) Discuss contigent immunization. Is this form of bond portfolio management strategy an active, passive or a combination of both, strategy? (e) (8 marks) END

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