98 Exercise 3: Consider the following table of bond prices. Express all rates in annual terms. Face value Time to maturity Annual coupon* Bond price (in $) (in years) (in $) (in $) 100 0.50 0.0 100 1.00 0.0 95 100 1.50 6.2 101 100 2.00 8.0 104 *Half of the annual coupon is paid every six months a. Calculate the interest rates for maturities of 6, 12, 18, and 24 months. b. What are the forward rates for the periods: 6 months to 12 months, 12 months to 18 months, and 18 months to 24 months? 1 c. Estimate the price and yield-to-maturity of a two-year bond paying a semiannual coupon of 7% per annum