Question $1(1$ point$)$

The prices of a number of $$1,000($face value$)$ zero coupon bonds are provided in the table below. Compute

the yields on the zero coupon bonds. Plot the yield curve. What is the shape of the yield curve?

upward sloping

downward sloping

$V-$shaped

flatQuestion $2(2$ points$)$

The Government of Canada $2-$year coupon bond has a face value of $$1,000$ and pays annual coupons of $$30.$

The next coupon is due in one year. The one$-$ and two$-$year spot rates on Government of Canada zero coupon

bonds are $6\%$ and $7\%.$ Use this information to answer the following $2$ questions.

What is the expected one$-$year spot rate in year $2?($Starting one year from today known as $E(k1)).$ Select

one option from a$)$ to e$)$

What is the expected price for the coupon bond at year one $($after the first coupon is paid$)?$ Select one

option from d$)$ to h$)$

a$)7\%$

b$)7\mathrm{.}3\%$

c$)8\%$

d$)8\mathrm{.}5\%$

e$)7\%$

f$)$ $$953\mathrm{.}62$

g$)$ $$962\mathrm{.}53$

h$)$ $$976\mathrm{.}30$

i$)$ $$980\mathrm{.}95$

j$)$ $$1,009\mathrm{.}54$