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6. Suppose that 1-year bonds currently offer a nominal yield to maturity of 4% (110 = 0.04), otherwise comparable 2-year bonds currently offer a yield

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6. Suppose that 1-year bonds currently offer a nominal yield to maturity of 4% (110 = 0.04), otherwise comparable 2-year bonds currently offer a yield to maturity of 3% (120 = 0.03), and 3 year bonds currently offer a yield to maturity of 2.5% (13,0 = 0.025). a. Draw the yield curve. b. Based on the Expectations Theory of Term Structure, what do investors expect the yield to be on 1 year bonds next year (i.e. - what is i11)? c. What do investors expect the yield to be on 1 year bonds in two years (11.2 =?)? d. What do investors expect the yield to be on 2 year bonds next year (isi =?)? e. Draw next year's (time 1) expected yield curve

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