3. The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. Suppose the interest rate is compounded once per year.

(1) What is, according to the expectations theory, the one-year interest rate in one year? (5 marks)

(2) What is, according to the expectations theory, the one-year interest rate in two years? (5 marks)

(3) What is, according to the expectations theory, the one-year interest rate in three years? (5 marks)

Maturity CYears Price $925 . 16 $862.57 $788.66 $711.00 2