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5) Suppose the one year spot rate and two year spot rate are both 4%. a) What is the price of a two year ZCB?

5) Suppose the one year spot rate and two year spot rate are both 4%.

a) What is the price of a two year ZCB?

b) What do I expect the price of a one year ZCB to be, one year from now?

Same 2 questions except now the one year spot rate is 3% and the 2 year spot rate is 4%.

Same 2 questions except now the one year spot rate is 5% and the 2 year spot rate is 4%.

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