As in the previous problem, consider holding a 3-year bond for 2 years. Now suppose that interest rates can change, but at time 0 the rates in Table 1 prevail. What transactions could you undertake using forward rate agreements to guarantee that your 2-year return is 6.5%?

Years To Maturity	Zero-coupon bond yield	Zero-coupon bond price	One-year implied Forward rate	Par coupon	Continuously compounded Zero Yield
1	6%	0.943396	6%	6%	5.82689%
2	6.5%	0.881659	7.00236%	6.48423%	6.29748%
3	7%	0.816298	8.00705%	6.95485%	6.76586%