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For a series of risk-free zero-coupon bonds, suppose that the yield to maturity of the bonds are all the same at 4%. (1) Find the
For a series of risk-free zero-coupon bonds, suppose that the yield to maturity of the bonds are all the same at 4%.
(1) Find the relationship between the yields to maturities and forward rates.
(2) What can we infer about the forward rates if expectations hypothesis holds?
(3) What can we infer about the forward rates if liquidity preference theory holds?
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