You find the following par yield curve reported in the Wall Street Journal:

Maturity---------Par yields

0. 5 -----------1% p. a.

1--------------2.5% p. a.

1.5------------3.5% p. a.

2-------------4.3% p. a.

All yields are per annum semiannual compounding.

1. Compute the corresponding zero yields from the above information

b) Price a 2-yr T-note that pays 5% p.a. coupons

c) If the expectation hypothesis is true, what is your best guess regarding the 1-yr zero yield in a year's time?