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Consider the following $1,000 par value zero-coupon bonds: Bond A B Years to Maturity 1 2 3 4 5 Yield to Maturity 5.40% 6.90% 7.40%

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Consider the following $1,000 par value zero-coupon bonds: Bond A B Years to Maturity 1 2 3 4 5 Yield to Maturity 5.40% 6.90% 7.40% 7.90% 10.50% D E The expected 1-year interest rate 2 years from now should be

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