Current (annualised) US Treasury spot rates are as follows:

6 months	1 year	18 months	2 years
0.4%	0.5%	0.6%	0.7%

Bond Cashflows:

Maturity: 2 years semi annual

Par value: 100

Coupon: 1.625/2 = 0.8125

6 months from now = 0.8125

1 year from now = 0.8125

1.5 year from now= 0.8125

2 years from now = 100+0.8125

From the US treasury spot rates above and assuming Z-spread of 35 basis points, calculate appropriate discount rates (implied spot rates) for this bonds cash flows. Show calculations. (3 marks)