1. The following table contains continuously compounded zerocoupon yields at maturities 1 to 5 years in each year. For example, the continuously compounded yield on a 5year zero coupon bond is 1.69% in 2014. Assume no arbitrage. [25 points total, 5 points each part] Remaining maturity (years) Year 1 2 3 4 5 2014 0.29 0.71 1.12 1.45 1.59 2015 0.79 1.08 1.35 1.59 1.80 2016 0.90 1.20 1.50 1.76 1.98 (a) What is the price of a 1year zerocoupon bond with a face value of $100 in 2015? (b) What is the price of a 5% coupon bond with remaining maturity of 2 years and a face value of $100 in 2014? (c) What is the continuously compounded return on the bond from part (b) if you buy it in 2014 and sell it in 2015? (d) Suppose that you buy the 2year zero coupon bond at a continuously compounded yield of 0.71% in 2014 and hold it to maturity. What is the continuously com pounded cumulative return over the 2 years? What is the average of this contin uously compounded return per year? (e) Is the average of the continuously compounded return from part (d) equal to the initial yield of 0.71%? Explain the economic reason for why or why not