The one to five year spot rates are given in the table below. The spot rates shown are effec- tive annual rates. Year Spot Rate 1 2 3 4. 5 0.25% 0.50% 0.75% 1.00% 1.25% (a) Calculate the following implied forward rates, 1f1, 2f1, 3f1 and 4f1. (b) Calculate the PVs of the following government bonds. i. 0.5% annual coupon bond with a maturity of 5 years and a face value of 1000. ii. 1.5% annual coupon bond with a maturity of 5 years and a face value of 1000. (c) Calculate the yield to maturity of bonds i and ii. Explain intuitively why the yield to maturity on the 1.5% coupon bond is less than that on the 0.5% coupon bond. (d) Why is the 0.5% coupon bond selling at discount (price face value)? The one to five year spot rates are given in the table below. The spot rates shown are effec- tive annual rates. Year Spot Rate 1 2 3 4. 5 0.25% 0.50% 0.75% 1.00% 1.25% (a) Calculate the following implied forward rates, 1f1, 2f1, 3f1 and 4f1. (b) Calculate the PVs of the following government bonds. i. 0.5% annual coupon bond with a maturity of 5 years and a face value of 1000. ii. 1.5% annual coupon bond with a maturity of 5 years and a face value of 1000. (c) Calculate the yield to maturity of bonds i and ii. Explain intuitively why the yield to maturity on the 1.5% coupon bond is less than that on the 0.5% coupon bond. (d) Why is the 0.5% coupon bond selling at discount (price face value)