Calculate the difference between the four-year spot rate


Four bonds each paying annual coupons of 2% of par value at the end of each year and redeemable at $1000 of par value reach their redemption dates in exactly one, two, three and four years’ time, respectively. The price of each bond is $970 per $1000 of redemption value. Calculate the difference between the four-year spot rate and the forward rate from time 3 years to time 4 years implied by the information given.

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Financial Management: Calculate the difference between the four-year spot rate
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