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Consider the following $1,000 par value zero-coupon bonds: Bond Year to Maturity Yield to Maturity A 1 6.10% B 2 5.30% C 3 9.78% D

Consider the following $1,000 par value zero-coupon bonds: Bond Year to Maturity Yield to Maturity A 1 6.10% B 2 5.30% C 3 9.78% D 4 9.40% E 5 10.72% The expected one-year interest rate three years from now should be __________.

Answer Choices:

a. ) 9.52

b. ) 7.22

c. ) 10.52

d. ) 8.27

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