Given information is about T-Accounts. Use the information and solve the questions

T-bonds
	Maturity	Coupon (%)	Bid	Asked	Chg	Asked yield
3	9/15/2024	3.25	97.09	97.094	-0.016	5.169	1.5
4	3/15/2025	1.75	93.304	93.31	-0.698	4.92	2
5	9/15/2025	3.5	97.024	97.03	-0.028	4.736	2.5
6	3/15/2026	2.5	94.044	94.05	-0.046	4.621	3
7	9/15/2026	1.125	88.23	88.234	-0.032	4.507	3.5
8	3/15/2027	2.5	92.266	92.272	-0.038	4.441	4

 For this part, use only the 8 Treasuries in the first set. 

1. a) Using bootstrap method long way, extract zero coupon bonds. 

b) Calculate spot rates of every six months up to 4 years 

c) Plot the spot rate curve 

2. a) Using short way of matrix inversion extract zero coupon bonds. 

b) Do you find the same zeros as in 1(a)? Why? Why not?

Answer rating: 100% (QA)

a Using the bootstrap method to extract zero coupon bonds To extract zero coupon bonds using the bootstrap method we can start with the highest maturi... View the full answer