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Interest rates are expressed as annualized rates for the term specified. Report your inter

Interest rates are expressed as annualized rates for the term specified. Report your inter

Interest rates are expressed as annualized rates for the term specified. Report your interest rate answers as fractional numbers like 0.11 for 11% per year.

Problem B. The current price of a 6-month zero coupon bond with a face value of $100 is B1. If a 9-month strip with a face value of $100 is currently trading for B2, find the forward interest rate for the 6 to 9 month period. Solve by both continuous compounding and quarterly compounding. Write your answers for the following:

10. Six-month spot interest rate for quarterly compounding.

11. Nine-month spot interest rate for quarterly compounding.

CAN YOU PLEASE SHOW WORK

Abhinav 04-Dec-2019

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