Question: 3. Use the expectations theory to answer the following question. You are considering investing in bonds for 15 years. Your choices are either a 15-year

3. Use the expectations theory to answer the following question. You are considering investing in bonds for 15 years. Your choices are either a 15-year bond or you can investing in a 14-year bond with a YTM of 5.6% and then at the end of the fourteenth year, you can invest in a 1-year bond with a YTM of 5.6% (i.e. f10=5.8%) Show all work. (1+y)" - (1+ y -- "-"x(1+1.) a) Find the YTM on the 15-year bond that will make you indifferent between the two investment choices. b) If the offered YTM on the 15-year bond is 5.65%, which investment will you choose and why

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