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Please assist with this questions Consider the following $1,000 par value zero-coupon bonds: Years until Bond Maturity Yield to Maturity A 5.508 IN P 6.

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Consider the following $1,000 par value zero-coupon bonds: Years until Bond Maturity Yield to Maturity A 5.508 IN P 6. 50 7.00 7.50 a. According to the expectations hypothesis, what is the market's expectation of the one-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.) Maturity (years YTM 1 2 3The yield to maturity on one-year zero-coupon bonds is 9%. The yield to maturity on two-year zero-coupon bonds is 10%. a. What is the forward rate of interest for the second year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Forward rate of interest + b. If you believe in the expectations hypothesis, what is your best guess as to the expected value of the short-term interest rate next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Short-term interest rate % c. If you believe in the liquidity preference theory, is your best guess as to next year's short-term interest rate higher or lower than in (b)? Higher Lower

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