Question
The following yield data relates to a number of high-quality corporate bonds recorded at each of the three points in time: Yield to Maturity Maturity
The following yield data relates to a number of high-quality corporate bonds recorded at each of the three points in time:
| Yield to Maturity | |||
| Maturity (years) | 5 years ago | 2 years ago | Today |
| 1 | 9.10% | 14.60% | 9.30% |
| 3 | 9.20% | 12.80% | 9.80% |
| 5 | 9.38% | 12.20% | 10.90% |
| 10 | 9.6% | 10.90% | 12.60% |
Required: Consider the data from 5 years ago. According to the expectations hypothesis, what approximate return did investors expect a 5-year bond to pay as of today? Hint: think of expectations as a percentage difference in returns between the present and the future.
Answer% (ROUND YOUR ANSWER TO 2 DECIMAL PLACES. FOR EXAMPLE: 17.23)
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