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One year ago you bought what at that time was a 2-year zero-coupon bond. When you bought the bond, the 1-year spot rate was 3.0% and the 2-year spot...
One year ago you bought what at that time was a 2-year zero-coupon bond. When you bought the bond, the 1-year spot rate was 3.0% and the 2-year spot rate was 4.0%. Today, when the bond has 1 year remaining until maturity, you find that all spot rates of all maturities are 3.5%. What is your realized rate of return on the bond over the past year if you decide to sell the bond today?