Calculate six-month forward rates f1, ..., f9; and verify spot rate z10 for the spot rate given on above. Note that f1 is from 0.5 years to 1 year, ..., f9 is from 4.5 years to 5 years. What is z10 on a bond-equivalent basis?

Exhibit 5-6 Theoretical Spot Rates Spot Rate (%) 5.25 5.50 5.76 6.02 6.28 6.55 6.82 6.87 7.09 7.20 7.26 7.31 7.43 7.48 7.54 7.67 7.80 7.79 7.93 8.07 Period Years 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0 10 12 13 14 15 16 17 18 19 20