One of your clients approaches to you with a request to borrow $100,000 one year from now. He needs to borrow this amount for one year (i.e. from year 1 to year 2 assuming today is year 0). Your client wants to secure the loan now with annual interest rate below 6%. You search todays bond market and find 1-year zero is traded at $948.50 and 2-year zero is traded at $900.00.

Based on the information, are you able to help your client?

Describe your strategy in detail (i.e. what the client needs to do today, at the end of year 1, and at the end of year 2).

What is the interest rate for the loan? (Par value of zeros is $1,000).