Actuary problem. I provided the answer, please help me to get the answer process. i need no.4

2. You are told that the one-year spot rate is 4% and the two-year spot rate is 5%. A newly issued bond 3-year bond with face value 100 and annual coupons of 6 sells for 99. (a) Find the three- year spot rate. (b) Find the effective annual yield to maturity. Answer: (a) so(3) = 6.485%; (b) YTM=6.377% 3. Continuation of last problem: find the forward rates io(1.2) and 10(2,3). Answer: io(1,2)= 6.0096%, 10(2,3) -9.518% 4. Continuation of last problem: Assume you can lock in a rate of 10% now, for the year starting two years from now that is t.(2, 3) = 10%), either as a borrower or as a lender. (a) Describe how you would be able to make an arbitrage profit now, assuming you can borrow and invest now at the given spot rates. (b) Find the arbitrage gain for each 1000 borrowed now. Answer: (b) 4.38 2. You are told that the one-year spot rate is 4% and the two-year spot rate is 5%. A newly issued bond 3-year bond with face value 100 and annual coupons of 6 sells for 99. (a) Find the three- year spot rate. (b) Find the effective annual yield to maturity. Answer: (a) so(3) = 6.485%; (b) YTM=6.377% 3. Continuation of last problem: find the forward rates io(1.2) and 10(2,3). Answer: io(1,2)= 6.0096%, 10(2,3) -9.518% 4. Continuation of last problem: Assume you can lock in a rate of 10% now, for the year starting two years from now that is t.(2, 3) = 10%), either as a borrower or as a lender. (a) Describe how you would be able to make an arbitrage profit now, assuming you can borrow and invest now at the given spot rates. (b) Find the arbitrage gain for each 1000 borrowed now. Answer: (b) 4.38