Today is January 2, 2017, and investors expect the annual risk-free interest rates in 2017 through 2019

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Today is January 2, 2017, and investors expect the annual risk-free interest rates in 2017 through 2019 to be:

Year                                     One-Year Rate (rRF)
2017 ............................................    2.2%
2018 ............................................    1.8
2019 ............................................    2.9

What is the yield to maturity for Treasury bonds that mature at the end of 

(a) 2018 (a two-year bond) and

(b) 2019 (a three-year bond)? Assume the bonds have no risks.

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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CFIN

ISBN: 978-1305666870

5th edition

Authors: Scott Besley, Eugene Brigham

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