Y9 The current interest rate on a 1 - year bond is 9%, and you expect the

Y9

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The current interest rate on a 1 - year bond is 9%, and you expect the interest rate on the 1-year bond next year to be 11%. What is the expected return over the two years? What interest rate must a 2-year bond ha ve to equal the two 1 - year bonds? The current interest rate on a 1 - year bond is 9%, and you expect the interest rate on the 1-year bond next year to be 11%. What is the expected return over the two years? What interest rate must a 2-year bond ha ve to equal the two 1 - year bonds?

Answer rating: 100% (QA)

To calculate the expected return over the two years we need to consider the returns from both years ... View the full answer