Suppose that all investors expect that interest rates for the 4 years will be as follows: What is the yield to maturity of a 3-year zero-coupon bond
A)7.03%
B)9.00%
C)6.99%
D)7.49%
E)None of the options

Name: Suppose that all investors expect that interest rates for the 4 years will be as follows: What is the yield to maturity of a 3-year zero-coupon bond A)7.03% B)9.00% C)6.99% D)7.49% E)None of the options
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Question

Suppose that all investors expect that interest rates for the 4 years will be as follows:  What is the yield to maturity of a 3-year zero-coupon bond
A)7.03% 
B)9.00% 
C)6.99% 
D)7.49% 
E)None of the options

Quizplus · Accepted Answer

[(1.05)(1.07)(1.09)]^1/3 - 1 = 6.99.

Suppose That All Investors Expect That Interest Rates for the 4