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

Year

Forward rate

Yield to maturity

1

2

3

4

10%

20%

30%

( B )

10.00%

14.89%

( A )

24.50%

1) Figure out the 3-year yield to maturity (A) based on the Expectations Hypothesis. (15points)

2) Figure out the Year 4 forward rate (B) based on the Expectations Hypothesis. (15points)

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