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The current term structure has the following nominal annual spot rates, ¡(2) 6-month spot rate is…

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The current term structure has the following nominal annual spot rates, ¡(2)

6-month spot rate is 8%;
1-year spot rate is 10%;
14-year spot rate is x%.
(a) Based on this term structure, a 17-year bond with (nominal annual) coupon rate 10% has a YTM of 11%. Find x.
(b) Suppose that the forward rate (quoted as a nominal annual rate of interest) for the period from 1 to 1/2 years is 11%. Find x in that case.
(c) You predict that 6 months from now, the 6-month spot rate will be 10%. Construct a strategy to implement now, involving sale and purchase of zero coupon bonds that will make a profit for you if your prediction is correct.

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