The current yield curve for default$-$free zero$-$coupon bonds is as follows:

$\backslash$table$[[\backslash$table$[[$Maturity$],[($Years$)]],$YTM $()],[1,10\mathrm{.}58],[2,12\mathrm{.}5],[3,13\mathrm{.}5]]$

Required:

a$.$ What are the implied $1-$year forward rates?

b$.$ Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will be the yield to maturity on $1-$year zero$-$coupon bonds next year?

c$.$ Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will be the yield to maturity on $2-$year zero$-$coupon bonds next year?

d$.$ If you purchase a $2-$year zero$-$coupon bond now, what is the expected total rate of return over the next year? $($Hint: Compute the current and expected future prices.$)$ Ignore taxes.

e$.$ What is the expected total rate of return over the next year on a $3-$year zero$-$coupon bond?

f$.$ What should be the current price of a $3-$year maturity bond with a $13\mathrm{.}5\%$ coupon rate paid annually?

g$.$ If you purchased the coupon bond at the price you computed in part $(f),$ what would your total expected rate of return be over the next year $($coupon plus price change$)?$ Ignore taxes.

Complete this question by entering your answers in the tabs below.

If you purchase a $2-$year zero$-$coupon bond now, what is the expected total rate of return over the next year? $($Hint: Compute the current and expected future prices.$)$ Ignore taxes.

Note: Do not round intermediate calculations. Round your answer to the nearest whole percent.