(Answered) At your favorite bond store bonds-r-us you see the

Finance

At your favorite bond store, Bonds-R-Us, you see the following prices:

One-year $100 zero selling for $90.19

Three-year 10% coupon $1,000 par bond selling for $1,000

Two-year 10% coupon $1,000 par bond selling for $1,000

Assume that the expectations theory for the term structure of interest rates holds, no liquidity premium exists, and the bonds are equally risky.

What is the implied one-year rate two years from now?

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