Question: You are given the following term structure for interest rates. Term Annual Spot Interest Rates 1. 7% 2. 8% 3. 9% (please do not use

You are given the following term structure for interest rates. Term

You are given the following term structure for interest rates. Term Annual Spot Interest Rates 1. 7% 2. 8% 3. 9% (please do not use excel) (a) Compute the one year forward rates on [0,1], [1,2], and [2,3]. (b) A bond has par amount 1000, term to maturity 3 years, and annual coupon rate 6% payable annually. Assume the above term structure is correct.Calculate the value of the bond at t= 0. (c) Calculate the annual effective yield-to-maturity for the bond if the bond is soldat a price equal to its value

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