Question: 5 . ( 2 points ) Suppose the yield to maturity on a one - year zero - coupon bond is 3 % . The

5.(2 points) Suppose the yield to maturity on a one-year zero-coupon bond is 3%. The yield to maturity on a two-year zero-coupon bond is 5%.(a) According to the Expectations Hypothesis, what is the expected one-year rate in the marketplace for year 2?(b) Consider an investor who is absolutely convinced that interest rates will not change so that the yield on a one-year bond will still be 3% this time next year. Which of these two bonds, the one-year zero coupon bond, or the two-year zero coupon bond, should this investor buy to maximize their one year return (under their strongly-held belief about future rates)?

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