Question 1: (35 points) You have estimated spot rates as follows: Year Spot Rate 123454.32%4.45%4.58%4.67%4.89% a) What are the discount factors for each date (that is, the present value of $1 paid in year t )? Please express to 4 decimal places (5 points) b) Calculate the PV of the following Treasury notes (with face value 100) : (5+5+5 points) a. 5% annual coupon bond, 3 -year note b. 6% annual coupon bond, 1 -year note c. 8% annual coupon bond, 3-year note c) Explain intuitively why the yield to maturity on the 8% bond is less than that on the 5% bond. (5 points) d) What should be the yield to maturity on a 2-year zero-coupon bond? (5 points) e) Consider a 10-year bond with annual coupon rate 5%. Suppose that the term structure is flat at 5%, i.e., spot rates for all maturities are 5\%. What is the bond price and YTM AND WHY? (5 POINTS)