What is the YTM of the 6-month zero-coupon bond, as an EAR?

Report your answer as a percent, not a decimal, with at least 4 significant digits.

For example, if the answer is 0.024354, then enter an answer of 2.4354.

b. What is the YTM of the 2-year zero-coupon bond, as an EAR?
Report your answer as a percent, not a decimal, with at least 4 significant digits.

c. What is the YTM of the 3.5-year bond, as an EAR?
Report your answer as a percent, not a decimal, with at least 4 significant digits.

d. Determine the No-Arbitrage price of a 2 year, 2.5%, semi-annual coupon bond with a face value of $1000. Keep your precision high.
HINT: The correct answer ends in .05.

e. Determine the No-Arbitrage price of a 3 year, 8.0%, semi-annual coupon bond, with a face value of $1000. Keep the precision of your computations high.
Hint: The correct answer ends in 7.43

Using your price in Part E, build a spreadsheet that looks like the one below, and then use Excel’s IRR command to compute the YTM of the 3 year, 8%, semi-annual coupon bond.

f. What is the YTM when measured as an EAR?
Report your answer as a percent, not a decimal, with at least 4 significant digits.
Hint: The answer does not begin with 2.x

g.What is the YTM when measured as an APR?
Report your answer as a percent, not a decimal, with at least 4 significant digits.

h.What is the YTM when measured as an Effective 6-month rate?
Report your answer as a percent, not a decimal, with at least 4 significant digits.

i. What is the YTM when measured as an effective per-decade rate?
Report your answer as a percent, not a decimal, with at least 4 significant digits.

j.

Now assume that the 2-year, 2.5% coupon bond in Part D is not trading at the No Arbitrage Price computed earlier in Part D. Instead, in reality it’s currently trading at an actual price of $951.05.

Is there an arbitrage opportunity here? Yes or no?

If there is an opportunity to earn an arbitrage profit, then compute the available “Arb.” profit per bond.

If there is no Arb. profit available, then enter 0.0000

Consider the prices of bonds, as shown below. All bonds have a face va of $1000 (as is the norm). TTM = Time to Maturity. TTM (years) 0.5 1 1.5 2 2.5 3 3.5 4 Coupon Rate 0 0 0 0 0 000 0 Price $991.12 $978.47 $963.64 $942.60 $906.60 $871.28 $831.87 $786.14 Determine the YTM of each bond as an EAR and plot the yield curve. Then answer the questions below.