You are given the following information on a 1-year, 2-year and 3-year bond each of which is redeemable at par and which pay coupons of 5% annually in arrears with the next coupon date in exactly 1 years time: Term 1 year 2 year 3 year Coupon 5% 5% 5% Price per 100 nominal 98 96 94 (i) Calculate the corresponding 1-year, 2-year and 3-year spot rates of interest to three decimal places. [5] Calculate the corresponding forward rates fo,1, f1,1 and f1.2 to three decimal places. [5] Calculate the corresponding 3-year par yield to three decimal places. [4] Explain the meaning of the term coupon bias and calculate the 3-year coupon bias. [4] (iv) You are given the following information on a 1-year, 2-year and 3-year bond each of which is redeemable at par and which pay coupons of 5% annually in arrears with the next coupon date in exactly 1 years time: Term 1 year 2 year 3 year Coupon 5% 5% 5% Price per 100 nominal 98 96 94 (i) Calculate the corresponding 1-year, 2-year and 3-year spot rates of interest to three decimal places. [5] Calculate the corresponding forward rates fo,1, f1,1 and f1.2 to three decimal places. [5] Calculate the corresponding 3-year par yield to three decimal places. [4] Explain the meaning of the term coupon bias and calculate the 3-year coupon bias. [4] (iv)