A three-year bond with 25 annual coupons yields 3 a


A three-year bond with 2.5% annual coupons yields 3%. A one-year zero coupon bond yields 2.80% and a three-year zero coupon bond yields 2.95%. Using the concept of bootstrapping, what is the two-year spot rate? Assume annual coupons for all three bonds.

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Financial Management: A three-year bond with 25 annual coupons yields 3 a
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