1. One, two, and three-year maturity, default-free zero-coupon bonds have yields-to-maturity of 3%, 4%, and 5% respectively. What is the implied two-year rate, one year from now?

		5.0%
		6.0%
		7.0%
		9.0%
		None of the above

If interest rates suddenly decrease, which of the two bond will likely experience the greater % increase in price? [I] 8% coupon, 20-year maturity discount bond [II] 8% coupon, 20-year maturity premium bond

		Bond I
		Bond II
		The % price decrease will be the same for the two bonds.
		Not enough information