Problem 1 Suppose we have prices of two bonds trading in the market: one-year (zero coupon) bonds are trading at $96 and two-year 7% coupon bonds are trading at $101 (per $100 of face value). Moreover, suppose we know that three- and four-year forward rates are 5% and 8% (f3 = 0.05 and f4 = 0.08), respectively. Thus, for example, one can lock in a loan to borrow money in 2 years that is to be repaid in 3 years at a rate of 5%. (a) Calculate the one and two-year spot rates (r and r2). (b) Calculate the two-year forward rate, f2. (c) Calculate the three- and four-year spot rates (r3 and r4)