(d) (20 points total) A one-year zero-coupon bond has YTM 2%, a 2-year 5%-coupon bond has...

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(d) (20 points total) A one-year zero-coupon bond has YTM 2%, a 2-year 5%-coupon bond has YTM 3.95%, and a three-year 5%-coupon bond has YTM 3.49%. All bonds have annual payments. i. (5 points) Find the current term-structure of interest rates. ii. (3 points) Suppose the Expectation hypothesis holds. What are your best estimates of the future spot rates 171 and 1r2? iii. (3 points) Suppose the term-structure stays the same for a year. Compute the one-year return on the three-year 5%-coupon bond. (d) (20 points total) A one-year zero-coupon bond has YTM 2%, a 2-year 5%-coupon bond has YTM 3.95%, and a three-year 5%-coupon bond has YTM 3.49%. All bonds have annual payments. i. (5 points) Find the current term-structure of interest rates. ii. (3 points) Suppose the Expectation hypothesis holds. What are your best estimates of the future spot rates 171 and 1r2? iii. (3 points) Suppose the term-structure stays the same for a year. Compute the one-year return on the three-year 5%-coupon bond.