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Betty and Bob must construct the ZCB yield curve for Freedonia. Freedonia has bonds of 6 months, 12 months, 18 months, and 24 months terms.

Betty and Bob must construct the ZCB yield curve for Freedonia. Freedonia has bonds of 6 months, 12 months, 18 months, and 24 months terms.
A 6-month ZCB with maturity value of $100 is priced at $94.3396.
A 1-year coupon bond with maturity value of $100 and a coupon rate of 8% per annum, payable semiannually is priced at $94.6112.
An 18-month coupon bond with maturity value of $100 and a coupon rate of 19% per annum payable semiannually is priced at $105.44031.
A 2-year coupon bond with maturity value of $100 and a coupon rate of 10% per annum payable semiannually is priced at $90.2871.


a By viewing the coupon bond as the sum of the ZCBs find the per annum yield compounded semiannually for the 6 months, 1 year, 18 months and 2 years ZCB.
b A special 2-year bond has maturity value of $100 and coupons of $4, $9, $5, and $7 in that order. Use the ZCB yield curve data to compute the price of the bond.

a. 6 month_______, 12 month______18month________24month________
b. The price of the special bond is___________

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