a Given the following spot rate curve:

Spot Rate

1-yr zero = 9.50%

2-yr zero = 8.25%

3-yr zero = 8.00%

4-yr zero = 7.75%

5-yr zero = 7.75%

What will be the present value of a five-year, 9% annual coupon rate bond?

If the bond is currently trading at $1065, is it undervalued or overvalued? Would you buy or sell this bond?

B. The one-year spot rate is 8% and the two-year spot rate is 9.5%. What is the one-year forward rate starting one year from now?