You observe the following Treasury yields: Year (Period) Yield to Maturity (%) Spot Rate (%) 0.5 (1) 10.00 10.00 1.0 (2) 9.75 9.75 1.5 (3) 9.50 9.48 2.0 (4) 9.25 9.22 2.5 (5) 9.00 8.95 3.0 (6) 8.75 8.68 3.5 (7) 8.50 8.41 4.0 (8) 8.25 8.14 4.5 (9) 8.00 7.86 5.0 (10) 7.75 7.58 5.5 (11) 7.50 7.30 6.0 (12) 7.25 7.02 6.5 (13) 7.00 6.74 7.0 (14) 6.75 6.46 7.5 (15) 6.50 6.18 8.0 (16) 6.25 5.90 8.5 (17) 6.00 5.62 9.0 (18) 5.75 5.35 9.5 (19) 5.50 ? 10.0 (20) 5.25 ? All the securities maturing from 1.5 years on are selling at par. The 0.5 and 1.0-year securities are zero-coupon instruments. Answer the below questions. (a) Calculate the missing spot rates. (b) What should the price of a 5% four-year Treasury security be?

4. You observe the following Treasury yields: All the securities maturing from 1.5 years on are selling at par. The 0.5 and 1.0-year securities are zero-coupon instruments. Answer the below questions. (a) Calculate the missing spot rates. (b) What should the price of a 5% four-year Treasury security be