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The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. Suppose the interest rate is compounded once
The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000. Suppose the interest rate is compounded once per year. 4. Maturity (Years) Price 975 940 900 4 850 (1) What is, according to the expectations theory, the one-year interest rate in one year? (5 marks) (2) What is, according to the expectations theory, the one-year interest rate in two years? (5 marks) (3) What is, according to the expectations theory, the one-year interest rate in three years
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