Assume that the following bond yields compounded


Assume that the following bond yields, compounded semiannually:

6-month Treasury Strip:            5.00%;

1-year Treasury Strip:    5.25%;

18-month Treasury Strip: 5.75%.

a. What is the 6-month forward rate in six months?

b. What is the 1-year forward rate in six months?

c. What is the price of a semiannual 10% coupon Treasury bond that matures in exactly 18 months?

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Financial Management: Assume that the following bond yields compounded
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