At your favorite bond store, Bonds R Us, you see the following prices One year $100 zero selling for $90 19 Three year 10 coupon $1,000 par bond selling for $1,000 Two year 10 coupon $1,000 par bond selling for $1,000 Assume that the expectations theory for the term structure of interest rates hold...

From a you know that the 1year rate today is 10877 Using this info ...

At your favorite bond store, Bonds-R-Us, you see the following prices: One-year $100 zero selling for $90.19

Question:

At your favorite bond store, Bonds-R-Us, you see the following prices:
One-year $100 zero selling for $90.19
Three-year 10% $1,000 par bond selling for $1,000
Two-year 10% $1,000 par bond selling for $1,000
Assume that the expectations 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?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...