Problem#3 Part A: Suppose that in the fixed-income securities market, the one-year, two-year, and three-year spot interest rates are 7.000%, 7.250%, and 7.500%, respectively. [That is, R Mirkto 1 = 7.000%, RMrkt..2 = 7.250% , and Mrkt.,3 = 7.500%.] As per the no-arbitrage principle, what is the theoretical value of two-year forward interest rate one-year from now? That is, what is the theoretical value of F1.2 (FTheo 1,2)? Just to remind you that, all the interest rates in this module are annualized continuously compounded. (It is helpful to draw a timeline, especially of the forward interest rate.) O 8.000% O 8.125% O 7.875% 0 7.750% 0 7.250% O 7.500%