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Hi,

Can some one please explain the solution to P1.T4.313.3

http://www.bionicturtle.com/forum/threads/p1-t4-313-forwardand-par-rates.6892/

313.3. We are given the 1.5 year discount function (i.e., set of discount factors) below. Also, below is the mathematical definition of the semi-annual par rate: the par rate, C(T), is the coupon rate such that the present value of the bond equals par.

Given these discount factors, which is nearest to the 1.5 year par rate, C(1.5)?

a) 1.33% b) 1.50% c) 1.80% d) 2.40%

Thanks

Can some one please explain the solution to P1.T4.313.3

http://www.bionicturtle.com/forum/threads/p1-t4-313-forwardand-par-rates.6892/

313.3. We are given the 1.5 year discount function (i.e., set of discount factors) below. Also, below is the mathematical definition of the semi-annual par rate: the par rate, C(T), is the coupon rate such that the present value of the bond equals par.

Given these discount factors, which is nearest to the 1.5 year par rate, C(1.5)?

a) 1.33% b) 1.50% c) 1.80% d) 2.40%

Thanks

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