Use the following Treasury curve and forecast data: 1 yr: 3.0% 2yr:3.2% 3 yr: 3.5% 4yx:3.6% 5 yr: 3.8% 7 yr: 3.9% 10yr:4.0% 5 yr TIPs: 0.5% 7yr TIPS: 0.8% Investor survey for average of short-term rates over the next 3 years: 3.1% Investor survey for average of short-term rates over the next 7 years: 3.4% Investor survey for average of short-term rates over the next 10 years: 3.4% 1) You can assume the treasury curve is also a zero-coupon curve. What is the 6-year forward rate beginning in 4 years? 2) You buy a 5-year 3.6\% coupon treasury bond today and then sell it two years from now. At that time, the yield curve has shifted up 10 bps all along the curve from today. What is the price you paid today, the price you received when you sold the bond, and your annualized return? 1 3) You can assume the treasury curve is also a zero-coupon curve. What is the 7-year forward rate beginning in 3 years? Assume you have a 10 year investing horizon and believe that the 7 -year rate beginning in 3 years will be 20 bps higher than the forward. Should you invest today for 3-years or 10years and why? Use the following Treasury curve and forecast data: 1 yr: 3.0% 2yr:3.2% 3 yr: 3.5% 4yx:3.6% 5 yr: 3.8% 7 yr: 3.9% 10yr:4.0% 5 yr TIPs: 0.5% 7yr TIPS: 0.8% Investor survey for average of short-term rates over the next 3 years: 3.1% Investor survey for average of short-term rates over the next 7 years: 3.4% Investor survey for average of short-term rates over the next 10 years: 3.4% 1) You can assume the treasury curve is also a zero-coupon curve. What is the 6-year forward rate beginning in 4 years? 2) You buy a 5-year 3.6\% coupon treasury bond today and then sell it two years from now. At that time, the yield curve has shifted up 10 bps all along the curve from today. What is the price you paid today, the price you received when you sold the bond, and your annualized return? 1 3) You can assume the treasury curve is also a zero-coupon curve. What is the 7-year forward rate beginning in 3 years? Assume you have a 10 year investing horizon and believe that the 7 -year rate beginning in 3 years will be 20 bps higher than the forward. Should you invest today for 3-years or 10years and why