3) A) A 30-year bond has a 3% annual coupon (with semiannual payments). If interest rates on comparable 30 -year bonds fall by 50 basis points to 2.5%, what will happen to the price of this bond (for every $100 of face value)? Briefly explain why the price changes in this way. B) If the yield on a 5-year bond is 4%, and the yield on a oneyear is 3.2%, what is the average of the implied one-year forward rates over the next four years? If I expect one-year rates to average 3.7% over the next four years, and I'm looking to issue bonds over a 5 -year horizon, should I issue the 5-year or the one-year and then issue one-years again in each of the next four years? C) If the expectations hypothesis of the yield curve holds, and the one-year rate is 2%, and the one-year rate is expected to be 1.4% one year from now, what is the two-year yield today? D) If the 10 -year yield is 3.5%, and consists of a term premium of 0.4%, are ST rates expected to be above or below implied forward ST rates? 3) A) A 30-year bond has a 3% annual coupon (with semiannual payments). If interest rates on comparable 30 -year bonds fall by 50 basis points to 2.5%, what will happen to the price of this bond (for every $100 of face value)? Briefly explain why the price changes in this way. B) If the yield on a 5-year bond is 4%, and the yield on a oneyear is 3.2%, what is the average of the implied one-year forward rates over the next four years? If I expect one-year rates to average 3.7% over the next four years, and I'm looking to issue bonds over a 5 -year horizon, should I issue the 5-year or the one-year and then issue one-years again in each of the next four years? C) If the expectations hypothesis of the yield curve holds, and the one-year rate is 2%, and the one-year rate is expected to be 1.4% one year from now, what is the two-year yield today? D) If the 10 -year yield is 3.5%, and consists of a term premium of 0.4%, are ST rates expected to be above or below implied forward ST rates