Question 14 - Zero coupon yields for maturities of 1-3 are y1 = 5%, y2 = 6.75%, y3 = 6%. Find the one-year forward rates f1 (the one-year rate from year 1 to year 2) and f2 (the one-year rate from year 2 to year 3).

f1: 8.52916667%

f2:4.51577094%

Question 15 - Recall that the par yield is the coupon rate that ensures that a bond sells at par. Using the zero coupon yields given in Question 14, find the par yield for a maturity of 3 years. (Hint: use Goal Seek)

Par yield: