Question: Year 1 2 3 4 Forward rate 10% 20% 30% (B) Yield to maturity 10.00% 14.89% (A) 24.50% Figure out the 3-year yield to maturity

Year 1 2 3 4 Forward rate 10% 20% 30% (B)

Year 1 2 3 4 Forward rate 10% 20% 30% (B) Yield to maturity 10.00% 14.89% (A) 24.50% Figure out the 3-year yield to maturity (A) based on the Expectations Hypothesis. (15points) Figure out the Year 4 forward rate (B) based on the Expectations Hypothesis. (15points)

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