Assume an efficient capital market. Consider two bonds at t$=0.$ The nominal value of each of the bonds equals $1,000.$ The following data is known:

Bond Maturity Coupon rate Price

A $1$ year $0\%980\mathrm{.}24$

B $2$ years $10\%1,070\mathrm{.}12$

Question: Calculate the $1-$year forward rate for the second year $(1$f$2)$ in $\%.$ Round your answer to $2$ decimal places and ignore the $\%$ sign $($e$.$g$.$ enter $12\mathrm{.}345\%$ as $12\mathrm{.}34)$Question $2$

Assume an efficient capital market. Consider two bonds at $t=0.$ The nominal value of each of the bonds equals $1,000.$ The

following data is known:

Question: Calculate the $1-$year forward rate for the second year $(1$f$2)$ in $\%.$ Round your answer to $2$ decimal places and ignore

the $\%$ sign $($e$.$g$.$ enter $12\mathrm{.}345\%$ as $12\mathrm{.}34)$

Hint: First, calculate the $1-$year spot rate. Second, you can calculate the $2-$years spot rate. Now you can use the following

formula to calculate the $1-$year forward rate for the second year $(1$f$2)$:

$(n-1)f_n=\frac{(1+r_n{)}^n}{(1+r_{n-1}{)}^{n-1}}-1$