The following is a list of prices for zero-coupon bonds of various maturities.
|
Maturities (years)
|
Price of Bond ($)
|
|
1
|
957.2
|
|
2
|
931.35
|
|
3
|
948.01
|
|
4
|
725.72
|
(a) Calculate the forward rates for one-year bonds to be delivered in one, two, and three years.
(b) Calculate the forward rate for a two year bond to be delivered in one year (2f1).
(c) Calculate the price of an 8% coupon bond that pays annual coupons. This coupon bond has a maturity of four years.