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The yield to maturity on zero-coupon bonds with one-year maturity is 3%, the yield to maturity on zero-coupon bonds with two-year maturity is 4%, and
- The yield to maturity on zero-coupon bonds with one-year maturity is 3%, the yield to maturity on zero-coupon bonds with two-year maturity is 4%, and the yield to maturity on zero-coupon bonds with three-year maturity is 6%. The zero-coupon bonds have no default risk. Today you buy at the fair price a 3-year maturity, $1000-par value bond that pays 7% coupon once a year. If the bond has no default risk and its yield to maturity will be 5.5% at the end of this year, your return on the bond over the year is about____________.
- 7.05%
- 6.46%
- 8.32%
- 7.93%
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