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 $ 963.43 12345 5 890.89 827.92 766.00 690.68 Required: a. Suppose that you buy today one 3-year maturity zero-coupon bond with face value $1,000. How many 5-year maturity zeros would you have to sell to make your initial cash flow equal to zero (specifically, what must be the total face value of those 5-year zeros)? b. What are the cash flows on this strategy in each year? c. What is the effective 2-year interest rate on the effective 3-year-ahead forward loan? d. & e. Confirm that the effective 2-year forward interest rate equals (1 + 4) x(1 + f5)-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 (1+ y5) 5 (1+ y3) - 1 Complete this question by entering your answers in the tabs below. Req A CD and Req B E a. Suppose that you buy today one 3-year maturity zero-coupon bond with face value $1,000. How many 5-year maturity zeros would you have to sell to make your initial cash flow equal to zero (specifically, what must be the total face value of those 5-year zeros)? Note: Round your answer to 4 decimal places. c. What is the effective 2-year interest rate on the effective 3-year-ahead forward loan? Note: Round your answer to 2 decimal places. d&e. 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 Note: Round your answer to 2 decimal places. a. 5-year maturity zeros c. 2-year interest rate d & e. 2-year loan rate % % < Req A C D and E Req B > Show less