The yields on a 1-year, 2-year and 3-year, risk-free, zero-coupon bonds are 2%, 2.5%, and 3% respectively.

a. What is the value of a 3-year, risk-free bond with a coupon rate of 4% (annual coupons) and a face amount of $1000?

b. What are the implied forward rates in the 2nd and 3rd years (f2 and f3)?

c. Under the expectations hypothesis, what are the expected yields on a 1-year and 2-year zero coupon bonds one year from now (at time 1)?