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Given the following information, answer the question step by step. A zero-coupon bond is a debt security that does not pay interest but instead trades

Given the following information, answer the question step by step.

A zero-coupon bond is a debt security that does not pay interest but instead trades at a deep discount.

zero-coupon bonds are popular investment assets.

Prices of zero-coupon bonds have the following pattern of interest rates:

Years from now 1-year interest rate
0 5.2%
1 7.3%
2 8.6%

Find i) 3-year interest rate on today. ii) 1-year forward rate 3 years from now if 4-year interest rate on today is 7.8%.

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