The maturities (T) in years and prices in dollars of zero-coupon bonds are in file ZeroPrices.txt on the book’s website. The prices are expressed as percentages of par. A popular model is the...

The maturities (T) in years and prices in dollars of zero-coupon bonds are in file ZeroPrices.txt on the book’s website. The prices are expressed as percentages of par. A popular model is the Nelson–Siegel family with forward rate

Fit this forward rate to the prices by nonlinear regression using R’s optim() function.

 (a) What are your estimates of θ1, θ2, θ3, and θ4?

 (b) Plot the estimated forward rate and estimated yield curve on the same figure. Include the figure with your work