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The term structure for zero-coupon bonds is currently: Maturity (Years) YTM (%) 4.4% 5.4 6.4 Next year at thls time, you expect it to be
The term structure for zero-coupon bonds is currently: Maturity (Years) YTM (%) 4.4% 5.4 6.4 Next year at thls time, you expect it to be Maturity (Years) YTM (%) 5. 4% 6.4 7.4 a. What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond? (Round your answer to 1 declmal place.) Rate of return 96 b-1. Under the expectations theory, what ylelds to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year? (Round your answers to 2 declmal places.) Maturity YTM 96 96 b-2. Is the market's expectation of the return on the 3-year bond greater or less than yours? O Greater O Less
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