Find a 1-year sport rate

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All interest rates are annual interest rates with semi-annual compounding.

All coupon rates are annual rates paid semi-annually. All bonds have a $100 face value.

Problem 1: A T-year par rate c(T) is the yield to maturity for a par bond (i.e., for a bond with the market price equal to its face value) that matures at time T. Use this definition and assume c(0.5)=5% and c(1)=6%

a) Find a 1-year sport rate. Keep at least 6 decimal digits while doing calculations and reporting the answer.

Reference no: EM132801849

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