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3. Suppose that people expect the one-year interest rate will equal 2% forever. a. Consider a ten year zero coupon (discount) bond with a face

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3. Suppose that people expect the one-year interest rate will equal 2% forever. a. Consider a ten year zero coupon (discount) bond with a face value of 1000. The bond has a current price of $800. Is the term premium positive or negative? $900. coupon bond over the past 25 years in the US. Why might the term b. Redo question (a), assuming that the bond has a current price of c. Using FRED, plot the behavior of the term premium on a 10 year zero premium rise over the next five years? Why might it fall

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