1. Give and describe the no-arbitrage table to price a 2-year zero-coupon loan two years from now, accounting for the actions of all parties. For concreteness sake, use the par yield curve in question 1. What is the lockable, annualized rate for such a loan?

2. Briefly describe the expectations hypothesis, and how the liquidity preference the theory accounts for the observation that the yield curve tends to be upward-sloped, rather than what is predicted by the expectations hypothesis.