Question: Question 4 (10 marks) The current yield curve for default-free zero-coupon bonds is as follows Maturity (Years) YTM (%) 10% 11% 12% Required: a. Compute

Question 4 (10 marks) The current yield curve for default-free zero-coupon bonds is as follows Maturity (Years) YTM (%) 10% 11% 12% Required: a. Compute the implied 1-year forward rates. b. Assume that the pure expectations hypothesis of the term structure is correct. If market 4 marks) expectations are accurate, compute the pure yield curve be next year (that is, the yields to maturity on 1- and 2-year zero coupon bonds) and describe. (6 marks)

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