1. Use per period compounding for the following question. At time 0, 1-period zero rate r(0,1) = 2% and 2-period zero rate r(0,2) = 3%. At period 1, 1-period zero rate r(1,2) = 3%.
   1. Compute the prices for zero coupons P(0,1), P(0,2) and P(1,2).
   2. What are the holding period returns from time 0 to period 1 for ZCB P(0,1) and P(0,2)?
   3. Assume that the local expectation hypothesis holds. What are the expected returns from time 0 to period 1 for ZCB P(0,1) and P(0,2)? What is the time 0 expected zero rate r(1,2)?
   4. What is the time-0 forward rate f(1,2) based on no-arbitrage condition?