In this part of the test, show all the steps of the calculation clearly. Each question is worth 25 points. 1. Given the following prices for an on-the-run bonds: Bond 6-month Zero Coupon 1-year Zero Coupon 1.5-year with coupon rate of 3% 2-year with coupon rate of 4% Price 98-18+ 97-043 95-255 94-031 a. Construct the spot rate (bond-equivalent yield) for 6-month, 1-year, 1.5-year and 2-year using the bootstrapping methodology. (20 marks) b. Find the no-arbitrage price of the off-the-run 2-year bond with coupon rate of 2%, quoted with the same format as given in the question. Assume semiannual compounding and coupons are paid semiannually. (5 marks) In this part of the test, show all the steps of the calculation clearly. Each question is worth 25 points. 1. Given the following prices for an on-the-run bonds: Bond 6-month Zero Coupon 1-year Zero Coupon 1.5-year with coupon rate of 3% 2-year with coupon rate of 4% Price 98-18+ 97-043 95-255 94-031 a. Construct the spot rate (bond-equivalent yield) for 6-month, 1-year, 1.5-year and 2-year using the bootstrapping methodology. (20 marks) b. Find the no-arbitrage price of the off-the-run 2-year bond with coupon rate of 2%, quoted with the same format as given in the question. Assume semiannual compounding and coupons are paid semiannually