The following table gives the prices of bonds:

Bond principal Time to maturity Annual coupon' Bond price

(8) (years) (S) ($)

100 0.50 0.0 98 100 1.00 0.0 95 100 1.50 6.2 101 100 2.00 8.0 104 Half the stated coupon is assumed to be paid every six months.

a. Calculate zero rates for maturities of 6 months, 12 months, 18 months, and 24 months.

b. What are the forward rates for the periods: 6 months to 12 months, 12 months to 18 months, 18 months to 24 months?

c. What are the 6-month, 12-month, 18-month, and 24-month par yields for bonds that provide semiannual coupon payments?

d. Estimate the price and yield of a two-year bond providing a semiannual coupon of 7% per annum.