Question 1. (This question has three parts: I, II and III) The following table gives the price of bonds: Bond Principal ($) 100 100 100 Time To Maturity (Months) 6 12 18 Annual Coupon Rate (%) 0.0 0.0 8.0 Bond Price ($) 96 90 95 Half the stated coupon is assumed to be paid every six months. Use semi-annual compounding as interest rate measurement. Part I. Calculate (annualized) zero rates for maturities of 6 months, 12 months and 18 months. (6 Marks) Part II. What is the fair price of 18-months zero-coupon bond given current term structure of zero rates? The par value of bond is assumed to be $100