See the photos below

Question 2: You can borrow $1 from bank and repay the loan in one payment after 1, 2, 3, etc. your choice. Repayment amounts --see Table 1 (E. g., if you borrow $1 for 17 Years ,you repay $4.5) 1.Calculate the annual and semi-annual compounding interest rates on these loans. They are called zero-coupon rates or spot rates because loans repayments have no intermediate payments [\"coupons\"]; only one cash ow at the end of the loan. Aside: for one-year the loan rate is 5%; for two-year loan rate is calculated from (1+r)2 =1.12-1+r= 1.12 I-r= 1.12 1; For three-year loan rate is calculated from (1+ r)3 = 1.20 ) 1 + r = (1.20)\"3 * r = (1.20)\"3 1; Etc. 2. Build an Excel spreadsheet that calculates this type of zero-coupon rates (annual compounding) and apply it to the data of zero- coupon loans with 1-20 Years. [See Table 1 below--you can copy-paste the data into Excel from the assignment on the website. N 0 need to copy by hand]. 3. Graph the Annual and S/A rates: x axes- years, y axes rates. The curve is called the spot yield curve or the zero-coupon yield curve. 4. Using rates from Q1.1, price a bond that has Face Value of $100, pays a $20 annual coupon [ first coupon payment in a year from today] and matures 4 years from today. Table 1 maturity of Paying back after $1 loan N Years 1 1.05 IN 1.12 3 1.20 .A 1.30 5 1.44 6 1.62 1.81 8 1.9 9 1.99 10 2.07 11 2.22 12 2.41 13 2.65 14 2.9 15 3.3 16 4 17 4.5 18 5.2 19 6 20 7