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Question 2: (Total: 20 marks) (a) Given the following information, compute the spot rates, the 1-year forward rate, the par rates, and YTM. (Coupons, if

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Question 2: (Total: 20 marks) (a) Given the following information, compute the spot rates, the 1-year forward rate, the par rates, and YTM. (Coupons, if any, are paid once a year). Maturity Annual Bond (years) Coupon Price Rate Spot Rate (continuous compounding) 1-yr Forward Rate (continuous compounding) Par Rate YTM (annual (annual compounding) compounding) 1 0 2 98 100 3% 69 (15 marks)

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