One of the fixed-income portfolio managers is considering purchasing a three-year 6% annual coupon paying bond. Please use this information to answer parts A and B.

1. Using the par rates for annual coupon sovereign debt in the table below and bootstrapping method to obtain the zero coupon curve.
2. What is the value of the option free bond that is being considered for purchase??

[5 marks]

1-year	2.3%
2-year	3.4%
3-year	4.3%