Question: YIELD CURVE FOR ZERO COUPON BONDS RATED AA Maturity YTM Maturity YTM Maturity YTM 8.00% 1 year 7 year 9.15% 10.45% 13 year 8.11% 2

YIELD CURVE FOR ZERO COUPON BONDS RATED AA Maturity YTM Maturity YTM Maturity YTM 8.00% 1 year 7 year 9.15% 10.45% 13 year 8.11% 2 year 8 year 9.25% 10.65% 14 year 3 year 8.20% 9 year 9.35% 15 year 10.75% 4 year 8.50% 10 year 9.47% 16 year 10.95% 5 year 8.75% 11 year 9.52% 11.00% 17 year 6 year 8.85% 12 year 9.77% 18 year 11.25% There are no liquidity premiums. 1 2. To the nearest basis point what is the expected interest rate on a one year AA zero coupon bond purchased eight years from today

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