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  3. 1. the following is a list of prices for zero-coup

1. The following is a list of prices for zero-coupon bonds with different maturities and...

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1. The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. Suppose the interest rate is compounded once per year. Maturity (Years) Price ($) 1 980 2 950 3 918 880 Answer the following questions: (a) What is, according to the expectations theory, the one-year interest rate in one year? (7 marks) (b) What is, according to the expectations theory, the two-year interest rate in one year? (7 marks) (c) What is, according to the expectations theory, the three-year interest rate in one year? (6 marks)

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