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Suppose today (2/19/2021) there exists a 3-year, 8% coupon bond (annual coupons), and instead of the expectations hypothesis suppose that instead you believe that one
Suppose today (2/19/2021) there exists a 3-year, 8% coupon bond (annual coupons), and instead of the expectations hypothesis suppose that instead you believe that one year from today (i.e., on 2/19/2022) the yield curve will look at the same as it does today. If you buy the bond today (2/19/2021), what do you expect your one-year holding period return to be (i.e., your return from 2/19/2021 to 2/19/2022)? NOTE: This is NOT the bond asked about in #16 -- it is a completely different bond. Make sure to fully support your answer on the supporting worksheet, and express your final answer rounded accurately to the nearest 4 decimal places (e.g., if you calculated 0.02345 then your final answer should be 0.0235). Suppose today (2/19/2021) there exists a 3-year, 8% coupon bond (annual coupons), and instead of the expectations hypothesis suppose that instead you believe that one year from today (i.e., on 2/19/2022) the yield curve will look at the same as it does today. If you buy the bond today (2/19/2021), what do you expect your one-year holding period return to be (i.e., your return from 2/19/2021 to 2/19/2022)? NOTE: This is NOT the bond asked about in #16 -- it is a completely different bond. Make sure to fully support your answer on the supporting worksheet, and express your final answer rounded accurately to the nearest 4 decimal places (e.g., if you calculated 0.02345 then your final answer should be 0.0235)
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