3. Suppose you buy a 3-year treasury note for $1,000 with a coupon rate of 2%. (a) If the risk-free rate remains at 2% for all treasury securities, how much could you sell this bond for after (i) 1 year, (ii) 2 years, (iii) 3 years? (b) If after 2 years you decide to sell this bond, how much would it be worth if the prevailing interest rate is (i) 1.5%, (ii) 3%? (c) Suppose after 1 year the interest rate rises to 3% and is expected to stay that way for several years. Someone offers to trade your bond for a $1,000 two-year bond that pays 3% after 1 year and 1% plus the principle after the second year. Would you take this trade? What if it paid 1% after 1 year and 3% plus the principle after the second year? Hint: Federal notes pay a simple interest rate structure, but you can always compound your earnings by buying another bond