The spot rate is calculated by finding the discount rate that makes the present value (PV) of a zero-coupon bond equal to its price. These are based on future interest rate assumptions. So, spot rates can use different interest rates for different years until maturity.
Yield to Maturity – YTM vs. Spot Rate. What's the Difference?
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Calculating the Yield-to-maturity of a Bond using Spot Rates PV = -102.95 (Since this is a cash outflow) PMT = 6 (Since this is a cash inflow for the investor) FV = 100 (Since this is a cash inflow for the investor) CPT => I/Y = 4.92 (Which signifies 4.92%)
Calculate Price of Bond using Spot Rates | CFA Level 1 - AnalystPrep
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