The current yield curve for default free zero coupon bonds is as follows:

Maturity (years)	Yield to Maturity
1	10%
2	11%
3	12%

4d) If you purchase a two year zero coupon bond now, what is the expected total rate of return over the next year? (You can assume that the par value is $100)

• 10%
• 11.03%
• 13.01%
• It cannot be determined

4e) If you purchase a three year zero coupon bond now, what is the expected total rate of return over the next year? (You can assume that the par value is $100)

• 10%
• 11.03%
• 13.01%
• It cannot be determined