3. For this question, please review the "Valuing Bonds" part of the NPV lecture notes posted on Blackboard as well as the assigned chapters in RWJ. STRIPS are zero-coupon Treasury bonds. The table below lists four Treasury STRIPS with their maturities and current (t-0) prices. Each STRIP promises to pay $100 at maturity. Strip Period Maturity Price 1 0.5 year 98.04 21 year 95.55 3 1.5 year 91.51 2 years 86.47 (a) Compute the current (i.e. at t-0) term structure of interest rates. Recall that term structure of interest rates is the set of the current interest rates (spot rates on zero coupon bonds) as a function of time to maturity. Because most bonds have semiannual coupons, the convention is to state all interest rates as annualized percentage rates (APR) compounded semiannually. For example, if an APR for the first semiannual period is 6%, it means that the actual semi-annual interest rate is 6% / 2--3%