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QUESTION
You own a 3-year, risk-free, zero-coupon bond with a face amount of $1,000 and a current price of $928. The current yield and on a 1-year,...
- You own a 3-year, risk-free, zero-coupon bond with a face amount of $1,000 and a current price of $928.60. The current yield and on a 1-year, zero-coupon bond is 2% (y1=2%). Under the expectations hypothesis, at what yield can you expect to sell the bond in 1 year, i.e., when it will have a maturity of 2 years?
