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1) Suppose the yields on one-year government bonds are as follows: spot = .015; 1-year forward = .025; 2- year forward = .035. According to

1) Suppose the yields on one-year government bonds are as follows: spot = .015; 1-year forward = .025; 2- year forward = .035. According to the expectations theory, what is the approximate (spot) yield on a 3- year government bond?

2) What is the price of the following bond? It has exactly 10 years to maturity. It pays a 5.0% semiannual coupon. Its yield (discount rate) is 6%.

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