An analyst gathered the following information (assuming annual compounding) to compute forward rates and to calculate bond prices.

Based on the data above, please compute:

1. One-year forward rates (F1,2) and (F2,3);

2. Two-year forward rate (F1,3);

3. Price of a 3-year 4% coupon bond (with coupons paid annually), assuming the par value is $1,000.

Years to Maturity Spot Rate 1 1 3% 2 4% 3 5%