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7. Suppose that all investors expect that interest rates for the 4 years will be as follows: Year Forward Interest Rate 0 (today) 4% 5%

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7. Suppose that all investors expect that interest rates for the 4 years will be as follows: Year Forward Interest Rate 0 (today) 4% 5% 8% 10% 2 3 What is the price of 3-year zero coupon bond with a par value of $1,000? (a) $751.31 (b) $794.10 (c) $839.92 (d) None of the above answers is correct

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