Q1. Consider the following par bond (ie coupon rate=yield and bond priced at par). Assume annual coupons. Maturity 1 2 3 Yield 4.58% 4.49% 4.52% Q1a. what is 1 year, 2 year, and 3 year discount factors? (3 pts) Q2b. what is the 1 year, 2 year, and 3 year spot rates (3 points)? Q2c. what is the 1 year forward rate starting in 1 year and 2 years respectively? (3 points?) (hint: this is asking for implied one year rate b/w 1y and 2y and b/w year 2 and year 3) Page 3 Q1d. how much should a three year 10% coupon note be priced at? What is the ytm for that bond? (3 pts) Q1e. if you hold the 3Y for 1 year, what is your total return from the investment assuming yld curve does not change ? (3 pts) Hint: your total return comes from coupon collection as well as price appreciation or depreciation.