2. Investors expect one-year interest rates for the next 4 years to be as follows: Year Forward Rate 1 5% (spot) 2 7% 3 9% 4 10% a. What is the three-year spot rate? b. What is the price of a three-year zero-coupon bond with face value of $1,000? 3. The YTM on one-year zero-coupon bonds is 5% and the YTM on two-year zeros is 6%. The YTM on 2-year coupon bonds with a 12% coupon rate (paid annually) is 5.8%. Is the price of the coupon bond consistent with spot rates? If not, what arbitrage opportunity does this create? Explain.