1. Use per period compounding for the following question. At time 0, 1-period zero rate r(0,1) = 2% and 2-period zero rate r (0,2) = 3%. At period 1, 1-period zero rate r (1,2) = 3%. a. Compute the prices for zero coupons P (0,1), P (0,2) and P (1,2). b. What are the holding period returns from time 0 to period 1 for ZCB P (0,1) and P (0,2)? Assume that the local expectation hypothesis holds. What are the expected returns from time 0 to period 1 for ZCB P (0,1) and P (0,2)? What is the time 0 expected zero rate r (1,2)? d. What is the time-0 forward rate f(1,2) based on no-arbitrage condition? c. 1. Use per period compounding for the following question. At time 0, 1-period zero rate r(0,1) = 2% and 2-period zero rate r (0,2) = 3%. At period 1, 1-period zero rate r (1,2) = 3%. a. Compute the prices for zero coupons P (0,1), P (0,2) and P (1,2). b. What are the holding period returns from time 0 to period 1 for ZCB P (0,1) and P (0,2)? Assume that the local expectation hypothesis holds. What are the expected returns from time 0 to period 1 for ZCB P (0,1) and P (0,2)? What is the time 0 expected zero rate r (1,2)? d. What is the time-0 forward rate f(1,2) based on no-arbitrage condition? c