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One-year bonds yield 9.50%, two-year bonds yield 10.50%, three-year bonds and greater maturity bonds all yield 11.50%. You are choosing between one-, two-, and three-year
One-year bonds yield 9.50%, two-year bonds yield 10.50%, three-year bonds and greater maturity bonds all yield 11.50%. You are choosing between one-, two-, and three-year maturity bonds all paying annual coupons of 10.50%, once a year. You strongly believe that at year-end the yield curve will be flat at 11.50%. a. Calculate the one year total rate of return for the three bonds
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