An analyst is evaluating her bond portfolio. One of her zero coupon bonds will mature in 20 years and the spot rate is 5%. The analyst expects that there would be two equally possible scenarios one year from today. In the first scenario the spot rate would be 3% and in the second scenario the spot rate would be 6%. Please help her to estimate the expected one year return (in percentage terms) of the bond. Note that all bonds are semi-annual.

Question 19 options:

	The answer is 19.91%
	The answer is 15.16%
	The answer is 19.50%
	The answer is 14.82%