The Wall Street Journal reported interest rates of 6 percent, 6.35 percent, 6.65 percent, and 6.75 percent for three-year, four-year, five-year, and six-year Treasury notes, respectively.

1. What is the 1-year forward rate from year 4 to year 5? What is the 2-year forward

   rate from year 4 to year 6? Note: report annualized rate

2. Based on your answer to part a., what is the relationship between 1-year forward rate from year 4 to year 5 and the expected one-year short rate for year 4 under the unbiased expectation theory? Does the relationship hold under the liquidity premium theory?