The Term Structure The current three year interest rate is 4.65% and the current two year interest rate is 4.35%. The implied forward rate from year two to year three is Multiple Choice 5.25% 4.50% 4.85% 5.04% Default Protections All but which one of the following will tend to reduce the required yield on a corporate bond? A sinking fund where the issuer may repurchase a given fraction of the outstanding bonds each year. o A sinking fund where the issuer sets aside money each year to ensure the bond principal can be repaid when due o A requirement that all future debt issues must be subordinated to the current debt. o A call provision with a five year deferred call. o