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The yieldson1-year,2-yearand3-year,risk-free,zero-couponbondsare2%,2.5%and3%, respectively. a.What isthevalueofa3-year,risk-freebondwithacouponrateof4%(annualcoupons) andafaceamountof$1,000? b.What aretheimpliedforwardratesinthe2ndand3rdyears(f2andf3)? c.Undertheexpectationshypothesis,whataretheexpectedyieldson1-yearand2-year zerocouponbonds1yearfromnow(attime1)?

The yieldson1-year,2-yearand3-year,risk-free,zero-couponbondsare2%,2.5%and3%, respectively. a.What isthevalueofa3-year,risk-freebondwithacouponrateof4%(annualcoupons) andafaceamountof$1,000? b.What aretheimpliedforwardratesinthe2ndand3rdyears(f2andf3)? c.Undertheexpectationshypothesis,whataretheexpectedyieldson1-yearand2-year zerocouponbonds1yearfromnow(attime1)?

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