8. The term structure for zero-coupon bonds is currently: Maturity (Years) 1 2 3 YTM (%) 4% 5 6 Next year at this time, you expect it to be: Maturity (Years) YTM (%) 1 5% 2 3 6 7 a. What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond? b. Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year? Is the market's expectation of the return on the 3-year bond greater or less than yours?