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Required: a . Assuming that the expectations hypothesis is valid, compute the expected price of the four - year zero coupon bond shown below at
Required:
a Assuming that the expectations hypothesis is valid, compute the expected price of the fouryear zero coupon bond
shown below at the end of i the first year; ii the second year; iii the third year; iv the fourth year.
b What is the rate of return of the bond in years and Conclude that the expected return equals the forward rate
for each year.
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Required B
Assuming that the expectations hypothesis is valid, compute the expected price of the fouryear zero coupon bond shown
below at the end of i the first year; ii the second year; iii the third year; iv the fourth year.
Note: Do not round intermediate calculations. Round your answers to decimal places.
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