You are given spot rates as follows

Year Spot Rate

1 3.5%

2 4.2%

3 5%

4 6.5%

5 7.2%

1. What are the discount factors for each date?
2. Calculate the prices of the following bonds with $1000 par value. Assume annual compounding
   • 3% coupon, two-year maturity
   • 6% coupon, five-year maturity
   • 11% coupon, five-year maturity