Q3. We observe the following annualized yields on four Treasury securities: (75%) The par is $1000 for all the securities. The one with 0.5-year to mature is a zero coupon bond. All other securities are coupon-bearing bonds selling at par. Note that, for par bonds, the coupon rate equals YTM. (20 points) 1. Calculate the spot rates for the maturities of 0.5,1,1.5, and 2 years. 2. What is the price of a 2-year bond with an 8% annual coupon rate (assume $1000 par)? 3. Suppose a 1-year zero-coupon bond with a par value of $1000 is selling at $900. Is there any arbitrage opportunity? If there is, construct an arbitrage portfolio and show the profit. 4. Calculate the one-period-ahead forward rates from 0 to 0.5, from 0.5 to 1 , from 1 to 1.5, and from 1.5 to 2