Question: 1. Consider two zero-coupon bonds, A and B. A has one year to maturity and a price of 955.11 and ( B ) has 2

1. Consider two zero-coupon bonds, A and B. A has one

1. Consider two zero-coupon bonds, A and B. A has one year to maturity and a price of 955.11 and \$ B \$ has 2 years to maturity and a price of 890.00. Both have a face value of 1000 . What is the forward rate of interest from the end of year 1 to the end of year 2 ? 2. The current selling price of a \20 coupon bond with 2 years to maturity and \$ 1,000 \$ face value is \$ 1,201.15 \$. The current selling price of a oneyear zero-coupon bond with \$ 50 \$ face value is \$ 44.45 \$. What must the price of a two-year zero-coupon bond with a \$ 1,650 \$ face value be in order to avoid arbitrage? 3. Consider the following bonds. Assume, where necessary, that each has just paid a coupon so that accrued interest is zero and we are currently at the end of December 2021. Assume \$ \\$ 100 \$ face value for each and semi-annual coupon payments. (a) Find the invoice price of each of the bonds (Note: assume ulat \$ m=2 \$ ). (b) Find the spot rates implied by the bond prices. (c) Find the implied forward rates implied by the spot rates

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