The table above lists the par coupon yields on 1,2,3, and 5 year bonds with a Face Value of $100 and a price of $100 (Par Bonds). 1(a) Do a linear interpolation to compute the par yields of the missing 4-year bond in the table above. Assume annual coupons. - Convert the par rates to spot rates (zero rates) for each maturity. - Plot the zero coupon yield curve. Use an excel sheet (one sheet) for all these computations. Link the cells in Excel so that if you change the par curve, all the spot rates are changed correspondingly. - Our objective is to match the spot curve. Assume that the annual volatility of yields is 0.5%. Construct a 4 step tree to fit the yield curve using the Ho-Lee model demonstrated in class. The computation should include the implied means (theta(1) to theta(4)). The table above lists the par coupon yields on 1,2,3, and 5 year bonds with a Face Value of $100 and a price of $100 (Par Bonds). 1(a) Do a linear interpolation to compute the par yields of the missing 4-year bond in the table above. Assume annual coupons. - Convert the par rates to spot rates (zero rates) for each maturity. - Plot the zero coupon yield curve. Use an excel sheet (one sheet) for all these computations. Link the cells in Excel so that if you change the par curve, all the spot rates are changed correspondingly. - Our objective is to match the spot curve. Assume that the annual volatility of yields is 0.5%. Construct a 4 step tree to fit the yield curve using the Ho-Lee model demonstrated in class. The computation should include the implied means (theta(1) to theta(4))