1. You observe the following post-coupon bond prices in the market, where coupons are paid out once a year: Bond Coupon rate Term to maturity Price ABC 20% 1 year $1081.08 KLM 10% 2 years $929.13 UPS 5% 3 years $1485.24 1.1. Compute the forward rates for one-year capital deliverable upon the maturity of bond ABC as well as that of bond KLM. [6 points] 1.2. Compute the forward rate for a two-year capital deliverable upon the maturity of bond ABC. [4 points] 1.3. A year from now you will have extra cash that you will not need for a couple of years. Therefore, as an investor, you want to commit to purchasing a 4 percent 2- year bond in a year, i.e. a bond that matures at the end of year 3 from now. You want to fix the price of that bond today. What price will the market offer? [6 points] 1. You observe the following post-coupon bond prices in the market, where coupons are paid out once a year: Bond Coupon rate Term to maturity Price ABC 20% 1 year $1081.08 KLM 10% 2 years $929.13 UPS 5% 3 years $1485.24 1.1. Compute the forward rates for one-year capital deliverable upon the maturity of bond ABC as well as that of bond KLM. [6 points] 1.2. Compute the forward rate for a two-year capital deliverable upon the maturity of bond ABC. [4 points] 1.3. A year from now you will have extra cash that you will not need for a couple of years. Therefore, as an investor, you want to commit to purchasing a 4 percent 2- year bond in a year, i.e. a bond that matures at the end of year 3 from now. You want to fix the price of that bond today. What price will the market offer? [6 points]