The spot interest rates are ri = 4.70%, r2 = 4.90%, r3= 5.00% and r4 = 5.05%, where rn refers to the n-year interest rate. If expectations hypothesis of term structure is right, what is the best estimate of one-year spot interest rate in (i) one year and (ii) three years? If you believe that investing in long-term bonds carries additional risks, what can you deduce about the one-year spot interest rate you obtain for (i) and (ii)? (12.5 marks)