Consider a group of coupon paying bond with zero credit-default risk. Each have a par value of $100. Each are trading at par value. Their maturity period range from 1 year to 5 years. Determine the spot rate for all five bonds. (Hint: This a par curve where the coupon rate is equal to the yield to maturity.

The detail is given in the table below:

Coupon rate Par value Bond price Years to maturity 1.0 2.0 3.0 4.0 4.00% 5.00% 6.00% 7.00% 8.00% $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 5.0 |