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Suppose the current 1-year and 2-year yields are given as y1,t=3% and y2,t=4%. Assume that the expectation hypothesis (EH) holds. (5 points) What is the
- Suppose the current 1-year and 2-year yields are given as y1,t=3% and y2,t=4%. Assume that the expectation hypothesis (EH) holds.
- (5 points) What is the future expected 1-year yield, E[y1,t]?
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- (5 points) What is the 1-year HPR of a 2-year zero coupon bond (ZCB)?
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- (5 points) What is the 1-year HPR of a 1-year ZCB?
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- (10 points) What can be misleading about the EH? Explain in fewer than three lines using your answers in (b) and (c).
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The Foundations Of Business Analysis
Authors: M Douglas Berg
1st Edition
1465222030, 9781465222039
