Homework answers / question archive / Suppose the price of the 3-year zero coupon bond is $800 and the 6-year zero bond is $600 How could you lock the 3-year borrowing rate starting at the end of year 3? Transaction Time=0 Time=3 Time=6                                   What is the implied forward rate on a 3- year bond which will start at the end of year 3 According to the liquidity premium theory of the term structure

Suppose the price of the 3-year zero coupon bond is $800 and the 6-year zero bond is $600 How could you lock the 3-year borrowing rate starting at the end of year 3? Transaction Time=0 Time=3 Time=6                                   What is the implied forward rate on a 3- year bond which will start at the end of year 3 According to the liquidity premium theory of the term structure

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Suppose the price of the 3-year zero coupon bond is $800 and the 6-year zero bond is $600

1. How could you lock the 3-year borrowing rate starting at the end of year 3?

2. What is the implied forward rate on a 3- year bond which will start at the end of year 3
3. According to the liquidity premium theory of the term structure. What is the expected rate on a 3-year bond at the end of year 3?