The yield to maturity on one$-$year zero$-$coupon bonds is $8\mathrm{.}3\%.$ The yield to maturity on two$-$year zero$-$coupon bonds is $9\mathrm{.}3\%.$

Required:

a$.$ What is the forward rate of interest for the second year? $($Do not round intermediate calculations. Round your answer to $2$ decimal places.$)$

Forward rate of interest

$\%$

b$.$ If you believe in the expectations hypothesis, what is your best guess as to the expected value of the short$-$term interest rate next year? $($Do not round intermediate calculations. Round your answer to $2$ decimal places.$)$

Short$-$term interest rate $$

c$.$ If you believe in the liquidity preference theory, is your best guess as to next year's short$-$term interest rate higher or lower than in $($b$)?$

$$ Higher

$$ Lower