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The Yield to maturity on 1-year bonds is 0%. You expect the short-term (1-year) rate to remain 0 for 4 years. After that the short-term
The Yield to maturity on 1-year bonds is 0%. You expect the short-term (1-year) rate to remain 0 for 4 years. After that the short-term rate will remain constant at 5% for the next 20 years. Compute the APPROXIMATE YTM on a 7-year bond.
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