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  3. you have a 4-year coupon bond that pays semiannual

You have a 4-year coupon bond that pays semiannual interest. The coupon rate is 8%...

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Accounting

  1. You have a 4-year coupon bond that pays semiannual interest. The coupon rate is 8% and the par value is 100.

    1. Can you construct a synthetic equivalent of this bond? Be explicit and show your cash

      flows.

    2. Price this coupon bond assuming the following term structure (represented by bid/ask prices

      at annual frequency) and by using a linear interpolation to discount semi-annual cashflows: B1 5 0:90=0:91; B2 5 0:87=0:88; B3 5 0:82=0:83; B4 5 0:80=0:81

    3. What is the 132 FRA rate?

Answer & Explanation Solved by verified expert
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