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2. Consider the following $1,000 par value zero-coupon bonds: (7) Years to Maturity Bond YTM 3% 1 2 4% 3 5% D 4 6% What

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2. Consider the following $1,000 par value zero-coupon bonds: (7) Years to Maturity Bond YTM 3% 1 2 4% 3 5% D 4 6% What is the expected 1-year interest rate in the 3rd year? (2) . b. What will be the price of the 2-year zero-coupon bond after 2 years? (2) Suppose, next year, you consider buying 3-year zero-coupon bond and holding it for 2 years. What will be the realized compound return? (3) . 2. Consider the following $1,000 par value zero-coupon bonds: (7) Years to Maturity Bond YTM 3% 1 2 4% 3 5% D 4 6% What is the expected 1-year interest rate in the 3rd year? (2) . b. What will be the price of the 2-year zero-coupon bond after 2 years? (2) Suppose, next year, you consider buying 3-year zero-coupon bond and holding it for 2 years. What will be the realized compound return? (3)

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