Question: 1. Consider a 2-year zero-coupon corporate bond which will default with probability 0.9%. In the event of default, there is a 60% chance bondholders will

1. Consider a 2-year zero-coupon corporate bond which will default with probability 0.9%. In the event of default, there is a 60% chance bondholders will recoup 61% of the principal and a 40% chance they receive nothing. If the current price of the bond is $94.68 per $100 of face value, what is the expected zero rate for this bond? Express your answer in raw decimal form to four (4) decimal places.

2. What is the price per $100 par value of an Australian commercial bill with 90 days to maturity at the settlement date if the quoted interest rate is 1.43% per annum? Express your answer in raw decimal form to four (4) decimal places.

3. A zero with 3 years to maturity is currently trading for $92.273 per annum. What is the interest rate per annum of this bond? Express your answer in raw decimal form to four (4) decimal places.

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