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Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity

Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000.

Maturity (Years) Price
1 $975.66
2 885.89
3 821.92
4 759.20
5 670.20

a.

Calculate the forward rate of interest for each year. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

Maturity (years) Forward Rate
2 %
3 %
4 %
5 %

b.

How could you construct a 1-year forward loan beginning in year 3? (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.)

Face value $
Rate of synthetic loan %

c.

How could you construct a 1-year forward loan beginning in year 4? (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.)

Face value $
Rate of synthetic loan %

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