Using the term structure of interest rates in the table


Maturity Interest Rate

1st yr 6.0%

2nd yr 6.25%

3rd yr 6.5%

4th yr 7.0%

Using the term structure of interest rates in the table above to solve the following problem. A bond pays $100 in years 1, 2, 3 and $1,100 in year 4. What is the price of the bond today? What is the YTM?

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Financial Management: Using the term structure of interest rates in the table
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