Assuming that the expectations hypothesis is valid, compute the expected price path of the 4-year bond in

Question:

Assuming that the expectations hypothesis is valid, compute the expected price path of the 4-year bond in the previous problem as time passes. What is the rate of return of the bond in each year? Show that the expected return equals the forward rate for each year.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...