Question: The table below provides information about treasury bonds. Bond Number Bond Principal ($) Time to Maturity (months) Annual Coupon (%) Market Price ($) 1 100

  1. The table below provides information about treasury bonds.

Bond Number

Bond Principal ($)

Time to Maturity (months)

Annual Coupon (%)

Market Price ($)

1

100

6

3

98

2

100

12

5

97

3

100

18

0

85

  1. Calculate zero rates (based on continuous compounding) for 6, 12, and 18 months and graph the treasury yield curve and provide your answers in the following table:
  2. Estimate the price of an 18-month Treasury bond that pays a coupon of 6%.

Bond 1

Zero Rate

1

0.070183

2

0.08035

3

0.108346

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