QUESTION 17 You observe a 5% yield on a 2-year bond and a 10% yield on a 3-year bond. If the expectations hypothesis holds, what is the expected yield on a 1- year bond 2 years from now? In Q17, before selling his house, Bob meets Ann who owns a new real estate firm that charges lower fees but hires less experienced agents. If Bob uses Ann's services, he will sell his house at lower selling cost (.e. below 8%), but with higher risk. Assuming, Bob requires a 7% IRR from his housing investment, what is the highest selling cost he would agree on? Write your answer in percent but without the percent sign, e.g. if your answer is 0.0456 = 4.56%, write it as 4.56 Hint: it's the same calculation as in Q18, but now you know that the IRR - 7% and you are solving for the selling cost - it's a small linear equation to solve