The yield to maturity on one-year zero coupon bonds is 498, Ask an Expert

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The yield to maturity on one-year zero coupon bonds is 4.98%. The yield to maturity on two-year zero coupon bonds is 6.94%.

a. What is the forward rate of interest for the second year? (Round your answer to 2 decimal places.)

Forward rate %

b. According to the expectations hypothesis, what is the expected value of the one-year interest rate for next year? (Round your answer to 2 decimal places.)

Expected value

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93049895

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