Problem 2. Consider the following zero-coupon bonds, each of which has a par value of $1,000. Use the information provided in the table below to answer questions (a) to (g). Zero-coupon Bond Year Price A 1 969.09 B 2 1914.72 3 840.68 D 4 1793.43 a) Calculate the spot rate for each zero coupon (round your answer to four decimal places) b) Plot the yield curve from these zero-coupon bonds with time to maturity on the horizontal axis and spot rate on the vertical axis. c) Use the theories discussed in class to explain the shape of the yield curve revealed in question (b). d) What is the price of a 4-year maturity bond with a 8% coupon rate paid annually? (Par value = $1,000). e) Given the answer to question (d), calculate the yield to maturity for this 4-year coupon bond. f) Calculate the duration of the above 4-year coupon bond. g) If the market yield changes by 0.05% in the next few minutes, what is the expected percentage price change of the bond over the next few minutes? Problem 2. Consider the following zero-coupon bonds, each of which has a par value of $1,000. Use the information provided in the table below to answer questions (a) to (g). Zero-coupon Bond Year Price A 1 969.09 B 2 1914.72 3 840.68 D 4 1793.43 a) Calculate the spot rate for each zero coupon (round your answer to four decimal places) b) Plot the yield curve from these zero-coupon bonds with time to maturity on the horizontal axis and spot rate on the vertical axis. c) Use the theories discussed in class to explain the shape of the yield curve revealed in question (b). d) What is the price of a 4-year maturity bond with a 8% coupon rate paid annually? (Par value = $1,000). e) Given the answer to question (d), calculate the yield to maturity for this 4-year coupon bond. f) Calculate the duration of the above 4-year coupon bond. g) If the market yield changes by 0.05% in the next few minutes, what is the expected percentage price change of the bond over the next few minutes