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Consider the following $ 1 , 0 0 0 par value zero - coupon bonds: Bond Years to Maturity YTM ( % ) A 1
Consider the following $ par value zerocoupon bonds:
Bond Years to Maturity YTM
A
B
C
D
Required:
According to the expectations hypothesis, what is the markets expectation of the yield curve one year from now? Specifically, what are the expected values of next years yields on bonds with maturities of a one year? b two years? c three years?
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