A one-year zero-coupon $2000 bond has a price of $1904.76. A two-year zero-coupon $3250 bond has a price of $2919.97. A three-year $3500 4% par-value bond has annual coupons and a price of $3315.33 (a) Find the spot rate r3 . Write your answer as a percentage rounded to 3 points after the decimal.

(b) Find the forward rate f[1,3]. Write your answer as a percentage rounded to 3 points after the decimal.