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6. Suppose the yield to maturity on a one-year zero-coupon bond is 2%. The yield to maturity on a two-year zero-coupon bond is 1.25% (a)

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6. Suppose the yield to maturity on a one-year zero-coupon bond is 2%. The yield to maturity on a two-year zero-coupon bond is 1.25% (a) According to the Expectations Hypothesis, what is the expected one-year rate in the marketplace for year 2? (b) Consider an investor who is convinced that the rate on a one-year bond will be exactly 2% this time next year. Which of the two bonds should this investor buy to maximize their one year return

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