The annual zero rate for a 6-month investment is 8%. The annual zero rate for a one-year investment is 9.8%. All rates are continuously compounded. A 1.5-year bond with 10% coupon rate and semiannual coupons on a face value of $100 sells for $96.50.

1. Use the bootstrap method to determine the 1.5-year zero rate.
2. What is the value of a 1.5-year bond with 12% coupon rate, paid semiannually, and a face value of $100?