1. Given the following prices for an on-the-run bonds: Bond 6-month Zero Coupon 1-year Zero Coupon 1.5-year with coupon rate of 3% 2-year with coupon rate of 4% Price 98-18+ 97-043 95-255 94-031 a. Construct the spot rate (bond-equivalent yield) for 6-month, 1-year, 1.5-year and 2-year using the bootstrapping methodology. (20 marks) b. Find the no-arbitrage price of the off-the-run 2-year bond with coupon rate of 2%, quoted with the same format as given in the question. Assume semiannual compounding and coupons are paid semiannually. (5 marks) 1. Given the following prices for an on-the-run bonds: Bond 6-month Zero Coupon 1-year Zero Coupon 1.5-year with coupon rate of 3% 2-year with coupon rate of 4% Price 98-18+ 97-043 95-255 94-031 a. Construct the spot rate (bond-equivalent yield) for 6-month, 1-year, 1.5-year and 2-year using the bootstrapping methodology. (20 marks) b. Find the no-arbitrage price of the off-the-run 2-year bond with coupon rate of 2%, quoted with the same format as given in the question. Assume semiannual compounding and coupons are paid semiannually