Directions: Show all your work. Circle your answer choice. If you solve the problem with a financial calculator list your N, I/YR, PMT, PV, and FV inputs.

Use the following information to answer questions 1-3. The zero-coupon interest rates for the next 5 years, R(0,1), R(0,2), R(0,3), R(0,4), and R(0,5), are 2.15%, 2.35%, 2.85%, 3.25%, and 4.60%, respectively. Assume zero-coupon bonds with annual compounding and face value of $1.

1. What is P(0,3)?. Round to the nearest $0.01.

2. What is the implied forward rate between years 2 and 5, R(2,5)?

3. What is the coupon rate on a 4-year coupon bond that sells at par?

Don't do it in Excel and show the steps.