1. Given the yield on a 3-year zero-coupon bond is 7% and forward rates are 6% in year 1 and 6.5% in year 2, what must be the forward rate in year 3? The answer is closest to:

A 6.9%

B 7.2%

C 6.1%

D 8.6%

E I do not wish to answer this question.

F 8.5%