Masters Corp issues two bonds with 20 year maturities Both bonds are callable at $1,050 The first bond is issued at a deep discount with a coupon rate of 7 to yield 16 0 The second bond is issued at par value with a coupon rate of 18 00 a What is the yield to maturity of the par bond Consider the following $1,000 par value zero coupon bonds Bond Years until Maturity Yield to Maturity A 1 8 00 B 2 9 00 C 3 9 50 D 4 10 00 a According to the expectations hypothesis, what is the markets expectation of the one year interest rate three years from now (Do not round intermediate calculations Round your answer to 2 decimal places ) b What are the expected values of next years yields on bonds with maturities of (a) 1 year (b) 2 years (c) 3 years (

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Question: Masters Corp. issues two bonds with 20-year maturities. Both bonds are callable at $1,050. The first bond is issued at a deep discount with a

Masters Corp. issues two bonds with 20-year maturities. Both bonds are callable at $1,050. The first bond is issued at a deep discount with a coupon rate of 7% to yield 16.0%. The second bond is issued at par value with a coupon rate of 18.00% a. What is the yield to maturity of the par bond?

Consider the following $1,000 par value zero-coupon bonds:

Bond	Years until Maturity	Yield to Maturity
A	1	8.00	%
B	2	9.00
C	3	9.50
D	4	10.00

a. According to the expectations hypothesis, what is the markets expectation of the one-year interest rate three years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What are the expected values of next years yields on bonds with maturities of (a) 1 year; (b) 2 years; (c) 3 years? (

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