Question: A) Consider five bonds with the following features at date t=0: Annual Coupon Maturity Price Bond 1 6 1 year 103 Bond 2 5 2

A) Consider five bonds with the following features at date t=0:

	Annual Coupon	Maturity	Price
Bond 1	6	1 year	103
Bond 2	5	2 years	102
Bond 3	4	3 years	100
Bond 4	6	4 years	104

Using the bootstrapping method, compute the yearly spot curve by calculating the spot rates for all four maturities (use continuous compounding).

B) Calculate all possible forwards rates starting two years from now using the appropriate spot rates from (A) (using the continuous compounding formula).

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