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The current yield curve for default-free zero-coupon bonds is as follows: Maturity (years) YTM 9.2% 10.2 11.2 a. What are the implied one-year forward rates?
The current yield curve for default-free zero-coupon bonds is as follows: Maturity (years) YTM 9.2% 10.2 11.2 a. What are the implied one-year forward rates? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Maturity (years) YTM 9.2% 10.2% 11.2% 2 c. What will be the yield to maturity on two-year zeros? (Do not round intermediate calculations. Round your answers to 2 decimal places.) YTM % d. If you purchase a two-year zero-coupon bond now, what is the expected total rate of return over the next year? (Hint. Compute the current and expected future prices.) Ignore taxes. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected total rate of return % e. If you purchase a three-year zero-coupon bond now, what is the expected total rate of return over the next year? (Hint Compute the current and expected future prices.) Ignore taxes. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected total rate of return %
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