All sub-questions a) - m) relate to the following information:

You observe the trading price of the following zero coupon bonds:

Maturity	Price
1	$96.15
2	$90.27
3	$83.96

Importantly you have been told that the pure yield curve is flat into perpetuity from year 3 onwards.

There is also a perpetuity in the market that pays an annual 10% coupon and is trading on a 6% yield.

All bonds trading in the market have a face value of $100.

You are faced with the following two liabilities:

1) A one-off $1,262.48 payment due in 4 years time

2) A one-off $1,898.30 payment due in 11 years time

You wish to immunize your interest rate risk.

a) What is the 1-year spot rate?

Enter your answer to 4 decimal places eg if your answer is 6.54% enter as 0.0654.

b) What is the 2-year spot rate?

Enter your answer to 4 decimal places eg if your answer is 6.54% enter as 0.0654.

c) What is the 3-year spot rate?

Enter your answer to 4 decimal places eg if your answer is 6.54% enter as 0.0654.