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4. You observe the following market prices for risk-free zero-coupon bonds with different maturities: Maturity Face value Price 100 95.24 Bund A Bond B 1

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4. You observe the following market prices for risk-free zero-coupon bonds with different maturities: Maturity Face value Price 100 95.24 Bund A Bond B 1 year 2 years 3 years 50 45.23 Bond C 1,000 8:39 a. Fill in the yield curve below in, round to two decimal places): 1-year 2-year 3-year Maturity: Yield: 3.00% b. Does your answer to part a) imply that investors expect interest rates to: i. Fall in the future Rise in the future iii. Stay about the same Not enough information iv

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