Consider the following $1,000 par value zero-coupon bonds: According to the expectations hypothesis, what is the market's

Question:

Consider the following $1,000 par value zero-coupon bonds:

Years untl Maturlty Yleld to Maturlty Bond 1 A 5% 2 B 3 6.5 D 4

According to the expectations hypothesis, what is the market's expectation of the yield curve one year from now? Specifically, what are the expected values of next year's yields on bonds with maturities of
(a) 1 year;
(b) 2 years;
(c) 3 years?

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...