The following table shows the price and yield-to-maturity of several zero coupon bonds of various maturities. Each zero coupon bond has a par value of $1,000.

Maturity (years)	Price of Bond	Yield to maturity
1	959.97	4.17%
2	904.96	5.12%
3	845.11	5.77%
4	784.96	6.24%

Required:

a. Calculate the implied sequence of forward rates. Show your answers as percentages to two decimal places (for example 1.23%). (3 marks)

b. Calculate the value of a two-year bond with a par value of $1,000 and a coupon rate of 5%, with coupons paid annually. (2 marks)

c. Assuming the expectations hypothesis of the term structure holds, what would be your expected holding period return over the second year? (2 marks)

d. Explain the liquidity preference theory of the term structure, and describe how your answer to part c) would be affected if this particular theory holds. (3 marks)