QUESTION 1 Bond quote Annual coupon payments (paid semi-annually) Face value (5) Time to maturity (years) bond price ($) zero rate 100 0.5 0 98 4.0405% 100 1 0 97 ? 100 1.5 15 115 100 2 20 2 5.500% Using the Table above, 1. find the appropriate zero rates for 1 year 2. find the appropriate zero rates for 1.5 year 3. find the 2-year bond price 4. find the par-yield for the 2-year-maturity bond *Note 1: zero rate for the 6 month period is done for you. *Note 2: coupon payments given are yearly coupon payments, which these will be paid out semi-annually (i.e. every 6 months) When doing calculations in this course, use at least 6 decimal places for accurate answers. QUESTION 1 Bond quote Annual coupon payments (paid semi-annually) Face value (5) Time to maturity (years) bond price ($) zero rate 100 0.5 0 98 4.0405% 100 1 0 97 ? 100 1.5 15 115 100 2 20 2 5.500% Using the Table above, 1. find the appropriate zero rates for 1 year 2. find the appropriate zero rates for 1.5 year 3. find the 2-year bond price 4. find the par-yield for the 2-year-maturity bond *Note 1: zero rate for the 6 month period is done for you. *Note 2: coupon payments given are yearly coupon payments, which these will be paid out semi-annually (i.e. every 6 months) When doing calculations in this course, use at least 6 decimal places for accurate answers