Suppose that the prices of zero-coupon bonds with various maturities are given in the following table
January 2nd, 2018
Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000.Maturity (Years)Price1$925.932853.393782.924715.005650.00a. Calculate the forward rate of interest for each year.b. How could you construct a 1-year forward loan beginning in year 3? Confirm that the rate on that loan equals the forward rate.c. Repeat ( b ) for a 1-year forward loan beginning in year 4.