Problem 15-19 The prices of zero-coupon bonds with various maturities are given in the following table. Suppose that you want to construct a 2-year maturity forward loan commencing in 3 years. The face value of each bond is $1,000. Maturity (Years) 1 Price $ 996.04 895.89 833.92 772.80 675.18 3 4 5 a. Suppose that you buy today one 3-year maturity zero-coupon bond. How many 5-year maturity zeros would you have to sell to make your initial cash flow equal to zero? (Round your answer to 4 decimal places.) 5-year maturity zeros 11.1800 b. What are the cash flows on this strategy in each year? (Negative value should be indicated by a minus sign. Leave cell blank if there is no effect. Round your answers to 2 decimal places.) Time Cash Flow 0 3 5 c. What is the effective 2-year interest rate on the effective 3-year-ahead forward loan? (Round your answer to 2 decimal places.) 2-year interest rate % d. Confirm that the effective 2-year forward interest rate equals (1 + f4) *(1 + (g) -1. You therefore can interpret the 2-year loan rate as a 2-year forward rate for the last two years. Alternatively, show that the effective 2-year forward rate equals (Round your answer to 2 decimal places.) (1 + 75) 5 (1 + y3) 3 1 2-year loan rate %