Please answer question 2. But the question 2 is based on question 1.

You have the following implied discount factors for a spot curve;

DF1 = 0.9355

DF2 = 0.8785

DF3 = 0.8361

DF4 = 0.7425

DF5 = 0.6875

DF6 = 0.6127

1.Given this information, calculate swap rates.

Calculate 3y1y and 2y3y forward rates.

2.Based on the spot rates of the previous problem, calculate and compare return of two investors investing in the following bonds for three years if spot curve remains unchanged

4% annual coupon 5-year maturity bond purchased at par

5.25% annual coupon 6-year maturity bond purchased at par