1. If the 4-year spot rate is 7% and the 3-year spot rate is 6% what is the one-

1. If the 4-year spot rate is 7% and the 3-year spot rate is 6% what is the one-year forward rate of interest three years from now? a. 10.0%b. 6.5%c. 9.6%d. None of the above2. How can one invest today at the 2-year forward rate of interest? I) By buying a 2-year bond and selling a 1-year bond with the same coupon II) By buying a 1-year bond and selling a 2-year bond with the same coupon III) By buying a 1-year bond and then after a year reinvesting in a further 1-year bond a. I onlyb. II onlyc. III onlyd. II and III only3. The expectations hypothesis states that the forward interest rate is the: I) Expected future spot rate II) Always greater than the spot rate III) yield to maturity a. I onlyb. II onlyc. III onlyd. II and III only4. If the nominal interest rate per year is 10% and the inflation rate is 4% what is the real rate of interest? a. 10%b. 4%c. 5.8%d. None of the above