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You have the following information about the current (t-) prices of a series of risk-free, highly liquid zero-coupon bonds each with a face value of
You have the following information about the current (t-) prices of a series of risk-free, highly liquid zero-coupon bonds each with a face value of $1,000 () maturing in one year: $ 960, (ii) maturing in two years: $918.36. (ii) maturing in three years: $880.08. (iv) maturing in four years: $830.58, and (v) maturing in five years: $783.53. What is the expected two-year interest rate of a zero-coupon bond issued three years from now? 4.35% 4.75% 5.00% 6.50% 5.98%
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