Business, 25.02.2020 01:58 rapryce

Prices of zero-coupon bonds reveal the following pattern of forward rates: Year Forward Rate 1 4 % 2 6 3 7 In addition to the zero-coupon bond, investors also may purchase a 3-year bond making annual payments of $40 with par value $1,000. a. What is the price of the coupon bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the yield to maturity of the coupon bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. Under the expectations hypothesis, what is the expected realized compound yield of the coupon bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Prices of zero-coupon bonds reveal the following pattern of forward rates: Year Forward Rate 1 4 % 2...

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