# Question: Suppose the yield on a one year zero coupon bond is 5

Suppose the yield on a one-year, zero-coupon bond is 5%. The forward rate for year 2 is 4%, and the forward rate for year 3 is 3%. What is the yield to maturity of a zero-coupon bond that matures in threeyears?

## Answer to relevant Questions

Your brother wants to borrow $10,000 from you. He has offered to pay you back $12,000 in a year. If the cost of capital of this investment opportunity is 10%, what is its NPV? Should you undertake the investment opportunity? ...Your firm spends $500,000 per year in regular maintenance of its equipment. Due to the economic downturn, the firm considers forgoing these maintenance expenses for the next three years. If it does so, it expects it will ...You are evaluating the following two projects:Use the incremental IRR to determine the range of discount rates for which each project is optimal to undertake. Note that you should also include the range in which it does not ...Using the assumptions in part (a) of Problem 5 (assuming there is no cannibalization),a. Calculate HomeNet’s net working capital requirements (that is, reproduce Table 8.4 under the assumptions in Problem 5(a)).b. ...In 2006 and 2007, Kenneth Cole Productions (KCP) paid annual dividends of $0.72. In 2008, KCP paid an annual dividend of $0.36, and then paid no further dividends through 2012. Suppose KCP was acquired at the end of 2012 for ...Post your question