Question: 3. (20) Suppose that we have one, two, three, and four-year bonds, each with face value normalized to $1000 and an annual coupon with a

3. (20) Suppose that we have one, two, three, and four-year

3. (20) Suppose that we have one, two, three, and four-year bonds, each with face value normalized to $1000 and an annual coupon with a rate of 10%, priced as follows. Bond 1-Year 2-Year 3-Year 4-Year 1100 100 100 100 1100 100 100 1100 100 C4 1100 Price 1008.33 1000.76 976.21 933.93 Using the law of one price, calculate the one, two, three, and four-year spot rates. C2

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