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You have the following information about the yield curve – Term 1 2 3 4 Rate...

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Finance

You have the following information about the yield curve – Term1 2 3 4 Rate 4% 4.50% 5% 5.50% What should be the price of a bondwith a face value of $100 and an annual coupon of 5% that maturesin 4 years. Show all calculations.

In the above question if the market price of the bond is $95,can you do arbitrage? Show how and your profit or loss. Show allcalculations.

If the market price of the bond is $115, can you do arbitrage?Show how and your profit or loss. Show all calculations.

Estimate the 1-year forward rate 1 year from now. Show allcalculations.

Estimate the 1-year forward rate 2 years from now. Show allcalculations.

Estimate the 1-year forward rate 3 years from now. Show allcalculations.

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