Exercise 2 (30 points):

Compute yield-to-maturity for the following zero-coupon bonds:

• 1-year zero-coupon bond, traded currently at 980 dollars
• 2-years zero-coupon bond, traded currently at 920 dollars
• 3-years zero-coupon bond, traded currently at 840 dollars

Assume that all 3 bonds have the same nominal: 1000 dollars.

Using YTMs calculated plot the yield curve.