The yield to maturity on one-year zero coupon bonds is 564, Ask an Expert

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The yield to maturity on one-year zero coupon bonds is 5.64%. The yield to maturity on two-year zero coupon bonds is 7.42%.

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
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