A three-year $1,000, 4%, par-value bond with annual coupons sells for $990, a two-year $1,000, 3% bond with annual coupons sells for $988, and a one-year, zero-coupon, $1,000 bond sells for $974. (a) Determine the spot rates r1, r2, r3.
(b) Determine the implied forward rate f[0,1], f[1,2] and f[1,3].

Less than .0001

Step-by-step explanation:

The population and sample mean  family income are the same: $34,000.

The sample standard deviation is given by:

For any give income, X, the correspondent z-score of the distribution is given by:

For X = $37,000:

Traditional z-score tables present values up to 3.49 at the 99.98-th percentile. A z-score of 8.485, which is way above the upper represented limit, denotes an almost zero probability that the sample mean exceeds $37,000.

It is fair to say that the probability that the sample mean exceeds $37,000 is less than .0001