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You observe the following term structure: Effective Annual YTM 1 - year zero - coupon bond 6 . 7 % 2 - year zero -

You observe the following term structure:
Effective Annual YTM
1-year zero-coupon bond 6.7%
2-year zero-coupon bond 6.8
3-year zero-coupon bond 6.9
4-year zero-coupon bond 7.0
Required:
If you believe that the term structure next year will be the same as todays, calculate the return on (i) the 1-year zero and (ii) the 4-year zero.
Which bond provides a greater expected 1-year return?

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