The U.S. Treasury note yield curve data is given as follows:

 

a) Compute the yield to maturity x of a zero-coupon bond that matures in 4 years. The value of x is (rounded to 4 decimal places) 1.

b) If the expectations theory of the yield curve is rounded, what is the forward rate y in year 4? The value of y is (rounded to 4 decimal places) 2.

The Treasury plans to issue a 3-year maturity coupon bond, paying coupons once per year with a coupon rate of 2.25% per annum. The face value of the bond is $100.

c) What will the price of the bond be? The price of the bond is (rounded to 2 decimal places) 3.

d) What will the yield to maturity of the bond be? The yield to maturity of the bond is (rounded to 4 decimal places) 4.

e) If the expectations theory of the yield curve is correct, what is the expected bond price next year? The expected bond price next year is (rounded to 2 decimal places) 5.

Years to Par Coupon Bond Yield to Zero Coupon Bond Yield to Calculated Forward Maturity Maturity Maturity Rates 1 2.00% 2.00% 2.00% 2 2.20% 2.20% 2.41% 3 2.30% 2.30% 2.49% st 4 2.35% X y