Question 1-

A 3-year bond carrying 3.4% annual coupon and $100-par is putable at par 1 year and 2 years from today. Calculate the value of the putable bond under the forward rate curve below.

1-year spot rate: 2.0%;

1-year spot rate 1 year from now: 2.6%;

1-year spot rate 2 years from now: 4.1%.

Assume annual compounding. Round your answer to 2 decimal places (nearest cent).

Question 2-

A 3-year bond carrying 3.4% annual coupon and $9,000-par is putable at par 1 year and 2 years from today. Calculate the value of the underlying straight bond under the forward rate curve below.

1-year spot rate: 2.1%;

1-year spot rate 1 year from now: 2.7%;

1-year spot rate 2 years from now: 4.2%.

Assume annual compounding. Round your answer to 2 decimal places (nearest cent).