6.

A 1-year zero coupon bond is priced at $947.87, while a 2-year zero coupon bond is priced at $881.66. Derive the 1-year and 2-year spot rate y₁ and y_2.

a.

5.5% and 6.5% respectively

b.

2.6% and 6.5% respectively

c.

5.5% and 12.0% respectively

d.

6.0% and 7.0% respectively

e.

Indeterminant from the information provided