Question: The current yield curve for default - free zero - coupon bonds is as follows: Maturity ( years ) Yield to Maturity 1 1 0

The current yield curve for default

-

free zero

-

coupon bonds is as follows:

Maturity

(

years

)

Yield to Maturity

1 10 %

2 11 %

3 12 %

Assume that the expectations hypothesis of the term structure is correct. If market expectations are accurate, what will the yield curve be next year?

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