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Suppose that Expectation theory holds. In the market, price of 1-year zero coupon is 970 today. price of 2-year zero coupon is 930 today. price

  1. Suppose that Expectation theory holds. In the market,
    1. price of 1-year zero coupon is 970 today.
    2. price of 2-year zero coupon is 930 today.
    3. price of 3-year zero coupon is 900 today.
  1. What is a price of 1-year zero coupon to be issued a year from now (at t=1)?
  2. What is a price of 1-year zero coupon to be issued two years from now (at t=2)?
  3. What is a price of 2-year zero coupon to be issued a year from now (at t=1)? What is a price of 3-year 5% annual coupon bond today?

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