Consider the data on four US Treasury coupon bonds. The coupons are paid semi-annually.

Maturity Date

Ask Price (per $100 of Face Value)

Coupon (in %)

5/31/2021

100.3120

2.000

11/30/2021

101.1260

1.500

5/15/2022

102.1240

1.750

11/30/2022

99.3140

0.125

a.Construct the time line (table), showing cash flows of these bonds distributed according to the dates when they will be paid;

b.Construct the term structure of interest rates (you have enough information to find four rates);

c.Your company plans to issue two-year maturity bonds with 5% coupon, paid semi-annually. What should be the price of your bonds if they have the same level of risk as those listed above?

d.What is the yield to maturity on your bond in part (c)?