Tommy is examining some risk-free Singapore government securities. The yields to maturity on three government...
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Tommy is examining some risk-free Singapore government securities. The yields to maturity on three government bonds with maturities of 1, 2 and 3 years are respectively 3%, 4% and 6%. The bonds all pay an annual coupon and have the same coupon rate of 1% and a face value of $1,000. (a) Calculate the prices of the three (3) bonds. (3 marks) (b) (i) Calculate the expected 1-year interest rate for year 2. (ii) Calculate the expected 1-year interest rate for year 3
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