Could you please help me to solve this quetsion with the working, Kind regards!!!

The prices of a set of zero-coupon government bonds with a face value of 100 and a

time-to-maturity of 1, 2, 3, 4 and 5 years are, respectively, 95.24, 91.57, 88.90,

87.14 and 86.26. These bonds can be assumed to be risk-free.

You also observe the prices of a set of zero-coupon corporate bonds, just issued by

Manchester plc, each of which has a credit rating of BBB. Each bond has a face value

of 100. The prices of the bonds with time-to-maturity of 1, 2, 3, 4 and 5 years are,

respectively, 88.50, 78.31, 69.31, 61.33 and 54.28.

e) Calculate the default risk premium between the BBB yield curve and the

government bond yield curve, for each maturity from 1 to 5 years.

f) What would happen to the prices of the zero coupon corporate bonds issued by

Manchester plc, if all the corporate bonds credit ratings were downgraded to CCC

from BBB? Assume the yield to maturity of all the zero-coupon government bonds

remain the same.Page 3 of 6

g) Liverpool plc today issues a coupon bond with a time to maturity of 5 years, a face

value of 10,000, and which pays a semi-annual coupon. Its coupon rate is 6% in

annualized terms, and its yield to maturity is 6% in annualized terms. What is its current

price?