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Assume that the interest rate on a one-year Vietnam bond that is purchased on January 1, 2016 is 2.15%. This one-year bond matures on January

Assume that the interest rate on a one-year Vietnam bond that is purchased on January 1, 2016 is 2.15%. This one-year bond matures on January 1, 2017. The interest rate on a two-year Vietnam bond purchased on January 1, 2016 is 3.8%. The expected interest rate on a one-year bond purchased on January 1, 2016 (and matures on January 1, 2017) is 4.93%.

a. Calculate the term premium on a two-year Vietnam bond.

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