1. Bond Valuation. Imagine that the spot rates for the next three years are r1 = 5.50%,r2 = 5.80%, and r3 = 6.00%. Specifically, the spot rates are the ask yields on Treasury STRIPs as of today. For example, r2 is the ask yield on a STRIP that matures 2 years from today. Assume that the par value of each bond is $1000. (a) Consider a U.S. Treasury bond paying $100 in year 1, $100 in year 2, and $1100 in year 3. What is the appropriate value of this bond? Is the appropriate value of this bond greater or less than its par value? Why