1. Suppose yields on a one-year bond are at 0.7 %, on a two-year bond are at 1.0 %, and on a three-year bond are at 1.5 %. What does this imply about future short-term interest rates if the expectations theory of the yield curve is valid. Calculate the future short-term expected interest rates for year 2 and year 3. Show your work.

2. What issues of taxation and dept during the Confederation Era are similar to those today?

3. The one-year zero rate is 6% and the three-year zero rate is 6.5%. What is the forward rate for the period between 1 and 3 years? All rates are continuously compounded.