Problem 1: a/ What is the value of a S-year 4.9% coupon bond (principal =S1000) if the appropriate discount rate for discounting cash flow is as follow: Year Discount Rate 1 5.1% 2 5.7% 3 6.2% 4 6.3% 5 6.6% The value you found is the arbitrage-free value b/ Suppose that the 4.9% 5-year bond is priced on the market, and that the yield is 5.9%, so that each cash flow is discounted at 5.9%. What is the price of that bond based on the 5.9% discount rate? Given the arbitrage-free value found in part a and the market price on part b', what action would a dealer take? What would be the arbitrage profit? Problem 2: A 20-year bond with $1,000 par value is priced at $1,026.47. The yield to maturity is 4.3% What is the coupon rate of the bond? Problem 3: A 15-year bond with $1,000 par value is priced at $893.85. The coupon rate is 5%. What is the coupon rate of the bond