The prices of zero-coupon bonds with various maturities are given in the following table. Suppose that you want to construct a 2-year maturity forward loan commencing in 3 years. The face value of each bond is $1,000.

The prices of zero-coupon bonds with various maturities are given in the following table. Suppose that you want to construct a 2-year maturity forward loan commencing in 3 years. The face value of each bond is $1,000. Maturity (Years) Price 1 $ 933. 43 2 860. 89 3 791. 92 4 725. 20 5 680. 72 3. Suppose that you buy today one 3-year maturity zero-coupon bond. How many 5-year maturity zeros would you have to sell to make your initial cash flow equal to zero? (Round your answer to 4 decimal places.) 0 Answer is complete and correct. 5-year maturity 1 1634 o zeros ' b. What are the cash flows on this strategy in each year? (Negative value should be indicated by a minus sign. Leave cell blank if there is no effect. Round your answers to 2 decimal places.) 9 Answer is complete but not entirely correct. _ _ c. What is the effective 2-year interest rate on the effective 3-year-ahead forward loan? (Round your answer to 2 decimal places.) x Answer is complete but not entirely correct. 2-year interest rate 16.00 x d. Confirm that the effective 2-year forward interest rate equals (1 + f) * (1+ f;) -1. You therefore can interpret the 2-year loan rate as a 2-year forward rate for the last two years. Alternatively, show that the effective 2-year forward rate equals (Round your answer to 2 decimal places.) (1 + 15) (1 + 1) Answer is complete but not entirely correct. 2-year loan rate 16.00 X