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Question 10.17: Explain how a deposit of $50, 000 for six months can be arra...

Explain how a deposit of $50, 000 for six months can be arranged to start in six months and find the rate if y(0, 6) = 6% and y(0, 12) = 7%, where τ=112\tau =\frac{1}{12} .

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Issue and sell 500 bonds maturing in 6 months with $100 face value, obtaining $48, 522.28. Use this sum to buy 520.4054 one-year bonds. After 6 months settle the bonds issued by paying $50, 000. After one year cash the face value of the bonds purchased. The resulting rate is 8%.

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