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The six-month Treasury Bill has a YTM of 5.25%. The one-year Treasury Bill has a YTM of 5.5%. Both of these are zero-coupon bonds. Thus,
The six-month Treasury Bill has a YTM of 5.25%. The one-year Treasury Bill has a YTM of 5.5%. Both of these are zero-coupon bonds. Thus, the first security for $100 today gets you $102.625 in six months. And the second security for $100 gets you 105.5756 in one year. All bonds with maturities greater than one year are semi-annual coupon bonds and selling at par. The 1.5-year bond has aYTM of 5.75%. The 2-year bond has a YTM of 6%. The 2.5-year bond has a YTM of 6.25%. The 3-year bond has a YTM of 6.5%. As always, all yields are quoted annually. 1. a. Calculate do.s, the price today for a security that pays one dollar 6 months from now (the 6-month discount factor). Also calculate, di, d.s, d2, d2s, and da. b. Based on these prices and cash flows, calculate the spot rates Zo.s, Z, Z1.5, Z2, Z2.5, and z3 to obtain the YTMs of zero-coupon bonds
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