Question 3.

The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. Suppose the interest rate is compounded once per year Maturity (Years) Price 975 940 4 850 (1) What is, according to the expectations theory, the one-year interest rate in one year? (5 uarks) (2) What is, according to the expectations theory, the one-year interest rate in two years? (5 What is, according to the expectations theory, the one-year interest rate in three years