Question

Consider a coupon paying bond with the price $998.25 and maturity in 6 month and a...

Consider a coupon paying bond with the price $998.25 and maturity in 6 month and a coupon paying bond with the price $1004.98 and maturity in 1 year. The annual coupon rate and the par value are the same for each bond and equal to 4% and $1000, respectively. Answer the following two questions. Find continuously compounded 6-month zero rate

Select one: a. 3.91% b. 5.11% c. 3.33% d. 4.31%

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Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

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