Assume 6-month zero rate is 4.045%. Also use the following table to answer the questions below. The following table gives the prices of bonds:

*Half of the stated coupon is paid every six months ** all rates are continuously compounded

Face Value Time To Maturity Coupon / Year Bond Price

100 1 year 0 97

100 1.5 Year 15 98.5

What is the zero rate for 1 year?

#1) 3.046%

#1) 4.545%

#1) 3.455%

#1) 5.206%

2. What is the zero rate for 1.5 year?

2) 12.245%

2) 13.522%

2) 16.544%

2) 15.377%