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Consider the following $1,000 par value zero-coupon bonds: BondYears to MaturityYTM(%)A15.4%B26.4C36.9D47.4 Required: According to the expectations hypothesis, what is the markets expectation of the yield

Consider the following $1,000 par value zero-coupon bonds:

BondYears to MaturityYTM(%)A15.4%B26.4C36.9D47.4

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?

BondYears to MaturityYTM(%)B1C2D3

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