Answers to Text Discussion Questions

See problem 2 for the T-bill yield to maturity conversion formula. The expected forward rates become 8.23%, 10.04%, 11.19%, 13.85%, 15.85% and 17.94%. The three year bond has a yield to maturity of 10.0515% and the 6 year bond has a yield to maturity of 12.9233%. ................
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