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9. Suppose that Expectation theory holds. Assume that face values of all bonds here is $1,000. In the market, 1. Price of 1 year
9. Suppose that Expectation theory holds. Assume that face values of all bonds here is $1,000. In the market, 1. Price of 1 year zero coupon is 970 today. 2. Price of 2 year zero coupon is 930 today. 3. Price of 3 year zero coupon is 900 today. a. What is a price of 1 year zero coupon to be issued a year from now (at t=1)? b. What is a price of 1 year zero coupon to be issued two years from now (at t=2)? c. What is a price of 2 year zero coupon to be issued a year from now (at t=1)?
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