What is the implied 2-year spot rate what is the


Suppose you observe the following forward rate curve:

Term Forward rate

0y1y 2.00%

1y1y 2.50%

2y1y 3.00%

1) What is the implied 2-year spot rate?

2) What is the no-arbitrage value of a fixed-rate bond with a $100 par value, a 4% coupon rate with annual payments, and a term to maturity of 2 years?

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