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The Price Of A Zero-coupon Bond With Maturity 1 Year Is $943.40. The Price Of A Zero-coupon ... Question: The price of a zero-coupon bond with maturity 1 year is $943.40. The price of a zero-coupon bond ... The price of a zero-coupon bond with maturity 1 year is $943.40. The price of a zero-coupon bond with maturity 2 years is $898.47. For this problem, express all yields as net (not gross) rates. Assume the face values of the bonds are $1000.

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Part 1 Attempt 1/10 for 10 pts. What is the yield to maturity of the 1 year bond? Correct YTM-(F/P)1-(F/P)-1-0.06 1/T Part 2 Attempt 1/10 for 10 pts. What is the yield to maturity of the 2 years bond? Correct v YTM-(F/P)1/T1-(F/P)1/2-1-0.055 Part 3 Attempt 1/10 for 10 pts. Assuming that the expectations hypothesis is valid, what is the expected short rate in the first year? Correct The expected short rate in the first year is the one year spot: r_1 0.06 Part 4 Attempt 1/10 for 10 pts. Assuming that the expectations hypothesis is valid, what is the expected short rate in the second year ? Correct r2-(1+0.055)/(1+0.06)-1-0.05 Part 1 Attempt 1/10 for 10 pts. What is the yield to maturity of the 1 year bond? Correct YTM-(F/P)1-(F/P)-1-0.06 1/T Part 2 Attempt 1/10 for 10 pts. What is the yield to maturity of the 2 years bond? Correct v YTM-(F/P)1/T1-(F/P)1/2-1-0.055 Part 3 Attempt 1/10 for 10 pts. Assuming that the expectations hypothesis is valid, what is the expected short rate in the first year? Correct The expected short rate in the first year is the one year spot: r_1 0.06 Part 4 Attempt 1/10 for 10 pts. Assuming that the expectations hypothesis is valid, what is the expected short rate in the second year ? Correct r2-(1+0.055)/(1+0.06)-1-0.05

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