Suppose bonds are priced as in Table 1 above. Suppose that at time 0 a default-free issuer contracts to sell at time 2 a semi-annual coupon bond maturing at time 3 at a price of par. What coupon rate must the issuer set for this bond to make this contract worth zero at time 0?

		Bond price		Zero price
Coupon	Maturity	per $100 par	Bond yield	per $1 par	Zero rate
2.000%	0.5	100.0000	2.000%	0.9901	2.000%
3.000%	1.0	100.4944	2.496%	0.9755	2.500%
4.000%	1.5	101.4755	2.987%	0.9563	3.000%
5.000%	2.0	102.9329	3.469%	0.9330	3.500%
6.000%	2.5	104.8548	3.942%	0.9057	4.000%
6.000%	3.0	105.0731	4.183%	0.8815	4.250%