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Consider the following $1,000 par value zero-coupon bonds: Years until Maturity 5 points Bond B c D Yield to Maturity 8.75% 9.75 10.25 10.75 4

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Consider the following $1,000 par value zero-coupon bonds: Years until Maturity 5 points Bond B c D Yield to Maturity 8.75% 9.75 10.25 10.75 4 Fook a. According to the expectations hypothesis, what is the market's expectation of the dne-year interest rate three years from now? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Interest rate b. What are the expected values of next year's yields on bonds with maturities of (a) 1 year(b) 2 years: (c) 3 years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) olook b. What are the expected values of next year's yields on bonds with maturities of (a) 1 year; (b) 2 years; (c) 3 years? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) YTM Maturity (years) 1 9 2 3 %

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