Let st denote the spot rate at period t, where t is measured in years. Take s1 = 5%, s2 = 6.1%, s3 = 6.7%, s4 = 8%, s5 = 8.2%.
What are the discount factor for each t?
How much would you pay for a 2 year bond with face value of $5, 000 paying annual coupons at r = 7%?
Determine if the yield to maturity on the 10% bond is higher or lower than on the 5% bond ( assume 5 year bond).