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You want to invest in zero-coupon risk-free bonds for the next 5 years. The 5-year spot rate is 3.5%. The 3-year spot rate is 3.0%.

You want to invest in zero-coupon risk-free bonds for the next 5 years. The 5-year spot rate is 3.5%. The 3-year spot rate is 3.0%. if you purchase a 3-year zero-coupon bond (bond A) and then reinvest your proceeds in a 2-years zero-coupon bond (bond B) when bond A matures, what do you expect the spot rate to be on bond B?

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