Suppose that in June 2013 the Canada June 2014 strip was selling for $988.53, the Canada June 2015 strip was selling for $969.15, and the Canada June 2016 strip was selling for $945.51. Each strip pays $1,000 at maturity.
a. Calculate the yield to maturity for each bond.
b. Calculate annually compounded, 1-year forward rate of interest at June 2014, June 2015, and June 2016.
c. Using the available information, estimate the June 2013 price of a 5% Canada bond maturing June 2016. Explain your assumptions.