The zero rates for one to four years and the implied forward rates a year from now $($for one to

three years, or $1f1$ to $1f3)$ are shown below:

a$.$ What is thelspot price of an annual$-$pay four$-$year bond with a par value of $100$ and a coupon

of $6\mathrm{.}00\%?$

b$.$ Assuming the implied forward rates accurately reflect the future spot rates, show that the

realized return for a one$-$year holding period is equal to the spot rate of $4\mathrm{.}00\%.$

c$.$ Now, if the yield curve in one year does not change at all from the present spot values,

calculate the realized one$-$year holding period return attained by 'riding the yield curve'.