1. (20 points) A 1-year zero-coupon bond with principal $1000 cost $980. A 2-year bond with principal $500 and paying 5.00% coupons cost $395. Coupons are paid annually. (a) (5 points) Find the 1-year and 2-year zero rates. (b) (5 points) Convert the 1-year zero rate, which is compounded continuously, into the equivalent rate with monthly compounding. (c) (5 points) Find the forward rate from 1 year to 2 years. (d) (5 points) Find the yield of the 2-year bond. (Final answers for rates must be written in the percent form with 2 decimal places, for example 0.0417 = 4.17%.)