At your favorite bond store, Bonds-R-Us, you see the following prices: One year $100 zero selling for $90.10
Three-year10% coupon $1,000 par bond selling for $1,000
Two-year 10% coupon $1,000 par bond selling for $1,000 Assume that the expected theory for the term structure of interest rates holds, no liquidity premium exists, and the bonds are equally risky. What is the implied one-year rate two years from now?