On May 23,20XX,the Existing or Current (Spot)one-Year,two-Year,three-Year,and Four-Year Zero-Coupon Treasury

On May 23,20XX,the existing or current (spot) one-year,two-year,three-year,and four-year zero-coupon Treasury security rates were as follows: ₁R₁ = 4.55 percent,
₁R₂ = 4.75 percent,
₁R₃ = 5.25 percent,
₁R₄ = 5.95 percent
Using the unbiased expectations theory,calculate the one-year forward rates on zero-coupon Treasury bonds for years two,three,and four as of May 23,20XX.

A) year 1: 4.95 percent, Year 2: 6.26 percent, Year 3: 8.08 percent
B) year 1: 3.75 percent, Year 2: 6.02 percent, Year 3: 9.00 percent
C) year 1: 4.95 percent, Year 2: 7.26 percent, Year 3: 8.08 percent
D) year 1: 3.65 percent, Year 2: 6.32 percent, Year 3: 11.08 percent

Correct Answer:

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