(1) Given the prices of zero coupon bonds Z(0, 1) = 0.9865, Z(0, 1.5) = 0.9581, Z(0, 2) = 0.9292, and Z(0, 2.5) = 0.9003, determine the following forward LIBORs L0[1, 1.5], L0[1.5, 2], and L0[2, 2.5].

(2) Continued from the last problem, further assume that the floor rate (strike) is 6.5%. The principal underlying the floor is $1,000,000 and the reset frequency is 6 months. Assume that the volatility is 20%. Determine the price of floor from 1 to 2 years