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Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3 4 5 Yield to Maturity 4.51 4.84 5.00%

Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows:

Maturity (years)

1

2

3

4

5

Yield to Maturity

4.51

4.84

5.00%

5.12%

5.37%

c. What is the risk-free interest rate for a 3-year maturity?

Note: Assume annual compounding.

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