Question 4. For this question and the above yield curve

(i) Find the continuous spot rates for s1, s2, . . . , s5. and describe the with also

s8 = 0.025, s10 = 0.027 where the subscript indicates years from today. Based on this data (ii) What is the forward rate for a three year bond 2 years from now? Is this rate higher or lower than the current rate for a three year ZCB?

(iii) What is the forward rate for a eight year bond 2 years from now?

(iv) What will be the prices of 3 year (respectively 8 year) zero coupon bonds now and

in two years time - based on these interest rates?