Question: Problem 5: Term Structure and Expectations Hypothesis (4 points) (a) The following is a list of prices for zero-coupon riskless bonds of various maturities, all

Problem 5: Term Structure and Expectations Hypothesis (4 points) (a) The following is a list of prices for zero-coupon riskless bonds of various maturities, all with face value of $1000. Calculate the (EAR) yields to maturity of each bond y, 92, 93, and y4, and the implied forward rates f1, f2, f3, and f4. Maturity (years) Y1 = Y2 = Y3 = Y4= 1 2 3 4 Price of Bond $943.40 $898.47 $847.62 $792.16 4884 f = || || || || f2 = f4=

Problem 5: Term Structure and Expectations Hypothesis (4 points) (a) The following is a list of prices for zero-coupon riskless bonds of various maturities, all with face value of $1000. Calculate the (EAR) yields to maturity of each bond y1,y2,y3. and y4, and the implied forward rates f1,f2,f3, and f4

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