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Question 3) The current yield curve looks like the following: Maturity 1 yr 2 yr |3yr 4 yr Yield(percentage) 1.75% 2.00% 2.25% 2.35% (a) According

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Question 3) The current yield curve looks like the following: Maturity 1 yr 2 yr |3yr 4 yr Yield(percentage) 1.75% 2.00% 2.25% 2.35% (a) According to the expectations hypothesis, what would be the average one-year yield on the yield curve two years from now? (In percentages) (greater than 2) Question 16 5 pts Q3-b) What is the price today of a 3-year risk-free coupon bond that has face value $1,000 and pays 2.0% annual coupons, assuming there is no arbitrage opportunity? between 900 and 1200 Q3-c) What is the holding period return for the coupon bond in part (b) over the next year (from t = 0 tot = 1) if the yield curve one year from now is the same as the yield curve today? (percentage) (between 2 and 4) (Pay attention to the sentence "yield curve stays", it is different than expectation hypothesis)

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