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Question 4 (Please use 6 decimals) Bonds pay interest (coupons) every 6 months. We observe the par bond yields Y1=0.03, Y2=0.04, Y3=0.05 and Y4=0.06. Please

Question 4 (Please use 6 decimals)

Bonds pay interest (coupons) every 6 months. We observe the par bond yields Y1=0.03, Y2=0.04, Y3=0.05 and Y4=0.06. Please find the spot rates S1,S2,S3,S4.

Question 5 (Please use 6 decimals). We have quarterly (every three months) interest payments. Please find the forward rates F1,2 , F2,3 and F1,3 if we know S1=0.03, S2=0.0402, S3=0.0503, S4=0.0608, etc.

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