An investor has an investment horizon of four years. The yield on a 2-year security today is
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An investor has an investment horizon of four years. The yield on a 2-year security today is 6 percent and the implied forward rate on a 2-year security two years from now is 6.75 percent. What should be the yield on a 4-year security today such that the investor is indifferent between investing in a 4-year security versus a combination of two-year securities?
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Financial Institutions, Markets and Money
ISBN: 978-1119330363
12th edition
Authors: David S. Kidwell, David W. Blackwell, David A. Whidbee, Richard W. Sias
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