It is okay if you can at least solve one question

Name Page 7 5. [20 points] Suppose there are following three bonds and contracts (face value of $100): (1) A 12-month zero-coupon bond trading at 94:04. (3) An 18-month coupon-paying bond, with (2) A 6-month forward contract with a 6-month maturity at an annual rate of 6.25%. Based on these prices and rates, calculate the folloupon rate of 7.0% trading at 100:00. (a) [10 points] Find the 12-month spot rate r. Assume there is no arbitrage, find the 6- month spot rate ri (The total return of investing in a 6-month zero-coupon bond and as the total return of investing in a 12-month zero coupon bond). entering into a 6-month forward contract with a 6-month maturity should be the same (b) [10 points] What is the 18-month spot rate r? Name Page 7 5. [20 points] Suppose there are following three bonds and contracts (face value of $100): (1) A 12-month zero-coupon bond trading at 94:04. (3) An 18-month coupon-paying bond, with (2) A 6-month forward contract with a 6-month maturity at an annual rate of 6.25%. Based on these prices and rates, calculate the folloupon rate of 7.0% trading at 100:00. (a) [10 points] Find the 12-month spot rate r. Assume there is no arbitrage, find the 6- month spot rate ri (The total return of investing in a 6-month zero-coupon bond and as the total return of investing in a 12-month zero coupon bond). entering into a 6-month forward contract with a 6-month maturity should be the same (b) [10 points] What is the 18-month spot rate r