Q1: Based on $100 par value, what should be the price of an option-free bond with a 4% annual coupon and 4 years to maturity?

The interest rate tree diagramed below pertains to the next four questions. You may assume that all of the bonds being valued in these questions are free of default risk. 2.52% 2.73% 2.02% 3.76% 4.08% 0.50% 5.60% 3.01% 6.08% 8.36% Year o Year 1 Year 2 Year 3 The tree assumes 20% annual interest rate volatility and is constructed from the following Treasury spot rates: Year 1: 0.50% Year 2: 1.50% Year 3: 2.40% Year 4: 3.00% The interest rate tree diagramed below pertains to the next four questions. You may assume that all of the bonds being valued in these questions are free of default risk. 2.52% 2.73% 2.02% 3.76% 4.08% 0.50% 5.60% 3.01% 6.08% 8.36% Year o Year 1 Year 2 Year 3 The tree assumes 20% annual interest rate volatility and is constructed from the following Treasury spot rates: Year 1: 0.50% Year 2: 1.50% Year 3: 2.40% Year 4: 3.00%