(a) Derive the 6-month, 1-year and 1.5-year discount factorsusing the 8s, 0s and 6s.
(b) What is the arbitrage-free price for the 10s given thediscount factors from (a).
(c) Compute the 6-month, 1-year and 1.5-year par yields.
(d) Based on the no-arbitrage principle, compute the forwardrates from 6 months to 1.5 years and 1 year to 1.5 years.
(e) Construct a synthetic forward loan from 6 months to 1.5years using the 8s and 0s. Solve for the positions in the bonds andverify that the loan rate equals the forward rate of the sameterm.
(f) Construct a synthetic forward loan from 1 year to 1.5 yearsusing the 8s, 0s and 6s. Solve for the positions in the bonds andverify that the loan rate equals the forward rate of the sameterm.