1) Current (annualized) US Treasury spot rates are as follows: Assuming that Z-spread is equal to 135 basis points, calculate the bond's arbitrage-free price. Show calculation

6 months-0.9%

1 year -1.0%

18 months - 1.1%

2 year -1.3%

1. If the bond is bought today at the arbitrage-free price and sold on 21 Aug 2019 at $99.30, what will be realised rate of return on bond, if no reinvestment of coupons is assumed. Show calculations
2. From the US treasury spot rates above and assuming a Z-spread of 135 basis points, calculate appropriate discount rates (implied spot rates) for this bond's cash flows. Show calculations
3. Using bond-specific spot rates you calculated inABOVE Question 3, derive six-monthly forward rates, including six- months forward rate 6 month from now -_0.5f_0.5, six-month forward rate 12 months from now -₁f_0.5, and six-months forward rate 18 months from now -_1.5f_0.5for the bond. Show calculations.
4. Estimate the bond's arbitrage free price using forward rates calculated in questionABOVE Question 4and comment on comparability of spot rate and forward rate pricingShow calculations.
5. There is another Amazon.com 2.5 year semi-annual 2% coupon paying bond in the market priced at $97.8. Using bond-specific spot rates as calculated inABOVE Question 3(for 0.5 year, 1 year, 1.5 year and 2 years), bootstrap 2.5-year spot rate for the bond. Show calculations