Suppose that investors expect that one-year interest rates for the next four years will be as follows:

Year Forward Interest Rate

0 6% today

1 7%

2 9%

3 10%

According to the expectations theory, what is the yield-to-maturity (YTM) of a 4-year zero-coupon bond (approximately)?

7.03%

8.00%

6.99%

7.49%

None of the above