This information on the yield curve applies to all questions below: interest rates for different maturities (1yr, 2, 3, 4, 5) are (1.0%, 2.8, 4.5, 5.5, 4.0) respectively. 8. What is the implied forward interest rate from year 3 to 5? e^(0.04(5))=e^(0.045(3)) +r(3,5)^(2) r(3,5) = [.04(5)-.045(3)] / 2 r(3,5) = 0.0325 r(3,5) = 3.25% 9. One year from today you will buy a four-year bond for $5,000. 9.a. What amount will you receive from the bond at t=5? (Note that you do not know what the specific dollar amount will be because you do not know what interest rates will be in one year. Use the same notation that we have used in class.) 9.b. You decide to hedge all risk. What is the amount you will receive at t=5 from the FRA