Question: please just answer questions E , F and g answer questions E and F And g U UUS Hot indicate Problem 15-17 The current yield
U UUS Hot indicate Problem 15-17 The current yield curve for default-free zero-coupon bonds is as follows: Maturity (Years) YTM (1) 5.24 a. What are the implied 1-year forward rates? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete and correct. Maturity 2 years 3 years Forward Rate 8.83 % 10.03 % b. Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will be the yield to maturity on 1-year zero-coupon bonds next year? Shift upward Shift downward c. Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will be the yield to maturity on 2-year zero-coupon bonds next year? Shift upward Shift downward d. If you purchase a 2-year zero-coupon bond now, what is the expected total rate of return over the next year? (Hint: Compute the current and expected future prices.) Ignore taxes. (Do not round intermediate calculations. Round your answer to 1 decimal place.) Answer is complete and correct. Expected total rate of return 2-year 2 % bond) e. What is the expected total rate of return over the next year on a 3-year zero-coupon bond? (Do not round intermediate calculations. Round your answer to 1 decimal place.) e. What is the expected total rate of return over the next year on a 3-year zero-coupon bond? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Answer is complete but not entirely correct. Expected total rate of return (3-year bond) 5.8 % f. What should be the current price of a 3-year maturity bond with a 8% coupon rate paid annually? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete but not entirely correct. price $ 7.60 g. If you purchased the coupon bond at the price you computed in part (), what would your total expected rate of return be over the next year (coupon plus price change)? Ignore taxes. (Do not round intermediate calculations. Round your answer to 1 decimal place.) Answer is complete but not entirely correct. Total expected rate of retum
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