horizon yield [realized compound return] for an investor with a 3-yr holding period and a reinvestment rate of 6% over the period. At the end of three years the 7% coupon bond with two years remaining will sell to yield 7%. The current yield curve for default free zero coupon bonds is as follows: Maturity [yrs] 10.0% 1 1.0% 12.0% 2 What are the implied one-year forward rates? You will be paying S10,000 a year in tuition expenses at the end of the next two years Bonds currently yield 8%. What is the present value and duration of your obligation? What maturity zero coupon bond would immunize your obligation? Suppose you buy a zero coupon bond with value and duration equal to your obligation Now suppose that rates immediately increase to 9%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? What if rates fall to 7%? horizon yield [realized compound return] for an investor with a 3-yr holding period and a reinvestment rate of 6% over the period. At the end of three years the 7% coupon bond with two years remaining will sell to yield 7%. The current yield curve for default free zero coupon bonds is as follows: Maturity [yrs] 10.0% 1 1.0% 12.0% 2 What are the implied one-year forward rates? You will be paying S10,000 a year in tuition expenses at the end of the next two years Bonds currently yield 8%. What is the present value and duration of your obligation? What maturity zero coupon bond would immunize your obligation? Suppose you buy a zero coupon bond with value and duration equal to your obligation Now suppose that rates immediately increase to 9%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? What if rates fall to 7%