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Suppose the yield on a one year bond is currently 2 . 5 % . Further assume that the expected yield on a one -

Suppose the yield on a one year bond is currently 2.5%. Further assume that the expected yield on a one-year bond over the next four years are, respectively: 2.4%,2.3%,2.2%, and 2.1%. Additionally, the term premium on the one-, two-, three-, four-, and five-year bonds are given in the table below: Term Premium on Different Maturity Length Bonds
Given the information above, the yield currently on the four-year bond will equal ____ percent.
A)2.2
B)2.1
C)2.5*Corrrect Answer*
D)2.4
E)2.6
F)2.3
Please explain why C is correct
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