consider the following interest rates on government bonds with zero coupon rate:

Maturity in Years	Interest Rate
1	1%
2	0.1%
3	0.8%
4	1%
5	3.5%

1. a) Using expectations theory, what are the expected future interest rates on one year bonds in 1,2,3 years time?

b) How would the interest rates within the table above be effected if the government enacted a forward guidance policy stating that it will not increase interest rates for 3 years (Assuming the market participants believe the forward policy)? How would the expectations in part (a) be effected?