(A) Suppose that the 6-month US Treasury bill rate is equal to5.98%, and the forward rate on a 6-month Treasury bill 6 monthsfrom now is 7.88%. (Both are in yearly terms).
What is the 1-year bill rate? (Keep your answer to 4 decimalplaces, e.g 0.1234)
(B) Consider two 5-year bonds: one has an 6% coupon rate andsells for $98; the other has an 9% coupon rate and sells for $103.What is the price of a 5-year zero coupon bond? (Assume thatcoupons are paid annually, and the face values of all the bonds are$100.)
(Keep your answer to 2 decimal places, e.g. xx.12.)
