You observe the following Treasury yields (all yields are shown on a bond-equivalent basis): All... 1 answer below »

You observe the following Treasury yields (all yields are shown on a bond-equivalent basis):

All the securities maturing from 1.5 years on are selling at par. The 0.5- and 1.0-year securities are zero-coupon instruments.

a. Calculate the missing spot rates.

b. What should the price of a 5% four-year Treasury security be?

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