The yield curve for default$-$free zero$-$coupon bonds is currently as follows:

Required:

a$.$ What are the implied one$-$year forward rates? $($Do not round intermediate calculations. Round your answers to $2$ decimal places.$)$

b$.$ Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will the

pure yield curve $($that is$,$ the yields to maturity on one$-$ and two$-$year zero$-$coupon bonds$)$ be next year?

There will be a shift upwards in next year's curve.

There will be a shift downwards in next year's curve.

There will be no change in next year's curve.The yield curve for default$-$free zero$-$coupon bonds is currently as follows:

Required:

a$.$ What are the implied one$-$year forward rates? $($Do not round intermediate calculations. Round your answers to $2$ decimal places.$)$

b$.$ Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will the

pure yield curve $($that is$,$ the yields to maturity on one$-$ and two$-$year zero$-$coupon bonds$)$ be next year?

There will be a shift upwards in next year's curve.

There will be a shift downwards in next year's curve.

There will be no change in next year's curve.