Consider the cash$-$flows at times $0,1$ and $2$ for Bond $$ and Bond

$$ reported in Table $2.$ The cash$-$flows are expressed from the point of view of an

investor who purchases one bond today and holds it until maturity $-0$ is thus the

market price of a bond, taken with a negative sign. Both bonds have maturity in two

years and are regarded as risk$-$free.

$012$

Bond $99\mathrm{.}532102$

Bond $100\mathrm{.}52\mathrm{.}5102\mathrm{.}5$

Table $2.$ The cash$-$flows of bonds $$ and $.$

$3\mathrm{.}2\mathrm{.}1.$ What are the YTMs on Bond $$ and on Bond $?$

$3\mathrm{.}2\mathrm{.}2.$ How can the bonds be used to construct a portfolio that pays out SEK $100$ in

one year and SEK $0$ in two years? What is today$$s price of this portfolio?

$3\mathrm{.}2\mathrm{.}3.$ How can the bonds be used to construct a portfolio that pays out SEK $0$ in one

year and SEK $100$ in two years? What is today$$s price of this portfolio?

$3\mathrm{.}2\mathrm{.}4.$ What are the implied rates of interest for loans with maturity in one year and

in two years?

Hint. The solution strategy in $3\mathrm{.}2\mathrm{.}2$ and $3\mathrm{.}2\mathrm{.}3$ is very similar to that used in Part $3$ of

Problem $6\mathrm{.}1,$ in the main Handout. Here, in each case, we must introduce symbols for

the positions in the bonds $-$ say $$ and $-$ and impose equality between the cashflows from the portfolio in one year and in two years and the desired ones. The system

thereby obtained should then be solved for the pair $(,),$ and today$$s cash$-$flows

are obtained by using the solution and the market prices of the bonds. Dear Expert, kindly provide a comprehensive analysis and calculations to your explanations please. I need to pass my exams. Thank you