Given the following Treasury securities and their current prices:

a. Using the bootstrapping approach discussed in Chapters 2 and 4, generate a theoretical spot rate curve for maturities from .5 years to 3 years.

b. Suppose the yields on the actual spot yield curve were equal to the YTMs on the Treasuries securities shown in Column

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2 3 4 5 6 7 Maturity Semiannual Annualized Current Security Type (Years) Coupon YTM Par Price 12345 T-bill 0.50 0.000 0.0500 100 97.5610 T-bill 1.00 0.000 0.0525 100 94.9497 T-note 1.50 3.000 0.0600 100 100.0000 T-note 2.00 3.250 0.0650 100 100.0000 T-note 2.50 3.500 0.0700 100 100.0000 6 T-note 3.00 3.750 0.0750 100 100.0000