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The current yield curve for default-free zero-coupon bonds is as follows: (a) What are the implied one-year forward rates? (b) Assume that the expectations hypothesis

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The current yield curve for default-free zero-coupon bonds is as follows: (a) What are the implied one-year forward rates? (b) Assume that the expectations hypothesis of the term structure is correct. If market expectations are accurate, what will the yield curve be next year? (c) If you purchase a two-year zero-coupon bond now, what is the expected total rate of return over the next year? What if you purchase a three-year zero-coupon bond? Ignore taxes

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