Prices of several bonds are given below:

*Half the stated coupon is assumed to be paid semiannually.

(a) Use the bootstrap method to find the 0.5-year, 1-year, 1.5-year and 2-year zero rates per annum with continuous compounding.

(b) What is the continuously compounded forward rate for the period between the 1.5-year point and the 2-

Bond Principal ($) Time to maturity (years) Annual coupon*($) Bond price (S) 100 0.5 0 98 100 1 2 97.5 98 100 1.5 3 100 2 6 102.5