I know its more than one question, however, they all correspond.

1. Assume the 1-year spot interest rate is 2.5% and the 2-year rate is 3%. What is the one-year forward rate for next year?

2. Given the information above, what is the price today of a 2-year zero coupon bond (a bond that has a face value of 100, hence pays 100 in two years, with no coupons)?

An investor with a 1-year horizon purchases this 2-year bond. He expects interest rates in a year to be the same as today. What is his expected ROR?

After one year, when he sells the bond, the one-year interest rate is the forward rate that you calculated in question #1. What is his actual ROR?

3. Besides the info in #1, assume the 3-year spot interest rate is 3.33% and the 4-year rate is 3.6%. What is the three-year forward rate for next year (i.e., the interest rate on a 3-year loan next year)?

4. Given the information in #3, what is the price today of a 4-year zero coupon bond?

An investor with a 1-year horizon purchases this 4-year zero-coupon bond. He expects interest rates in a year to be the same as today. What is his expected ROR?

After one year, when he sells the bond, the three-year interest rate is the forward rate that you calculated in #3. What is his actual ROR?

5. Given the information in #3, what is the one-year forward rate for next year and the two-year forward rate for next year in addition to the three-year forward rate for next year you already calculated?

6. Given the information in #3, what is the price of a 4-year 5% coupon bond?

An investor with a 1-year horizon purchases this 4-year 5% coupon bond. He expects interest rates in a year to be the same as today. What is his expected ROR?

After one year, when he sells the bond, the one, two and three-year spot interest rates are the forward rates that you calculated in #5. What is his actual ROR?