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)7.00%
B)9.00%
C)6.99%
D)4.00%
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)7.00% B)9.00% C)6.99% D)4.00% 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)7.00% 
B)9.00% 
C)6.99% 
D)4.00% 
E)None of the options

Quizplus · Accepted Answer

[(1.03)(1.04)(1.05)]^1/3 - 1 = 4%.

Suppose That All Investors Expect That Interest Rates for the 4