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Problem 5 Continue to work with the bonds from Problem 4. Also use your answers to parts a, b andc of Problem 4 to answer the following questions: 1. Find four ?rst rates of the term structure of interest rates. Use bootstrappingmethod. 2. Graph the ?rst four rates of the term structure (annualized). Is term structure increasing or decreasing? Please provide the explanation for the main reason for the term structure being increasing or decreasing. 4. Suppose that US Treasury plans to issue two-year coupon bonds, which pay semi—annual coupons. The coupon rate is set at 3% per year. What is the priceof these bonds? 5”

 
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