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Consider the following $1,000 par value zero-coupon bonds:BondYears untilMaturityYield to MaturityA18.50%B29.50C310.00D410.50a. According to the expectations hypothesis, whatis the market’s expectation of the one-year interest rate threeyears from now? (Do not round intermediatecalculations. Round your answer to 2decimal places.)b. What are the expected values of next year’syields on bonds with maturities of (a) 1 year; (b) 2 years; (c) 3years? (Do not round intermediate calculations. Round youranswer to 2 decimal places.)The current yield curve for default-free zero-coupon bonds is asfollows:Maturity (years)YTM19.0%210.0311.0a. What are the implied one-year forward rates?(Do not round intermediate calculations.Round your answers to 2 decimal places.)b. Assume that the pure expectations hypothesis ofthe term structure is correct. If market expectations are accurate,what will the pure yield curve (that is, the yields to maturity onone- and two-year zero-coupon bonds) be next year?There will be a shift upwards in next year's curve.There will be a shift downwards in next year's curve.There will be no change in next year's curve.c. What will be the yield to maturity on two-yearzeros? (Do not round intermediate calculations.Round your answers to 2 decimal places.)d. If you purchase a two-year zero-coupon bondnow, what is the expected total rate of return over the next year?(Hint: Compute the current and expected future prices.)Ignore taxes. (Do not round intermediate calculations.Round your answer to 2 decimal places.)e. If you purchase a three-year zero-coupon bondnow, what is the expected total rate of return over the next year?(Hint: Compute the current and expected future prices.)Ignore taxes. (Do not round intermediate calculations.Round your answer to 2 decimal places.)