2. The current on-the-run yields for the Ramsey Corporation are as follows: Assume that each bond is an annual-pay bond. Each bond is trading at par, so its coupon rate is equal to its yield to maturity. Answer the below questions. ( 90 points) (a) Using the bootstrapping methodology, complete the following table: (b) Using the spot rates, what would be the value of an 8.5% option-free bond of this issuer? (c) Using the one-year forward rates, what would be the value of an 8.5% coupon option-free bond of this issuer? (d) Using the binomial model (which assumes that one-year rates undergo a lognormal random walk with volatility ), show that if is assumed to be 10%, the lower one-year forward rate one year from now cannot be 7%. (e) Demonstrate that if is assumed to be 10%, the lower one-year forward rate one year from now is 6.944%. (f) Demonstrate that if is assumed to be 10%, the lower one-year forward rate two years from now is approximately 6.437%. (g) Show the binomial interest-rate tree that should be used to value any bond of this issuer. (h) Determine the value of an 8.5% coupon option-free bond for this issuer using the binomial interest-rate tree given in part g. (i) Determine the value of an 8.5% coupon bond that is callable at par (100) assuming that the issue will be called if the price exceeds par