A seven-year bond pays coupons annually, with the first due one year from now. It has face value equal to 1000 and coupon rate 6%. The term structure of interests is flat with all spot rates equal to 8%. What is the price of the bond? The effective annual interest rate is 5% and is constant across time and maturities. A bond has four years to maturity, face value $100, annual coupon rate equal to 7% and pays coupons semi-annually. What is the fair price of this bond? 3. The current term structure of interest rates is such that the one-year rate is 0.5%, the two-year rate is 1%, the three-year rate is 2% and thereafter the term structure is flat at 2.25%. What is the price of a five-year bond which pays coupons annually at rate 4%, assuming a face value of 500? 4. Using the same term structure as in the previous question, price a two-year bond with face value 1000 and coupon rate 2%. Compute the yield to maturity on this bond. 5. Consider a treasury bond with eight years to maturity, coupon rate 4%, face value $100 and a quoted yield of 3.90%. If coupons are paid semi-annually, show that the bond price is 100.68. 6. A bond has exactly three years to maturity and pays coupons (annually) at a rate of 6%. Its yield to maturity is 5%. What is the price of 100 of face value of this bond? What is the bond's Macaulay duration and, based on the duration, by how much you would expect the bond's price to change if its yield to maturity was to increase by 0.10%? 7. Using the data in question 3, compute the one-year forward rate covering the period between the end of year 1 and the end of year 2. Compute the forward rate between the end of year 2 and the end of year 3 as well. Comment on the shape of the forward rate curve with reference to theories of the term structure of interest rates