Suppose that all investors expect that interest rates for the 4 years will be as follows: $\begin{array}{lr}
& \text { Forward } \
\text { Year } & \text { Interest Rate } \
\hline 0 & \text { (today) } 6 \% \
1 & 7 \% \
2 & 9 \% \
3 & 10 \%
\end{array}$ If you have just purchased a 4-year zero-coupon bond, what would be the expected rate of return on your investment in the first year if the implied forward rates stay the same? (Par value of the bond = $1,000)
A) 5%
B) 7%
C) 9%
D) 10%
E) None of the options are correct.

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The Answer of Suppose that all investors expect that interest rates for the 4 years will be as follows: $\begin{array}{lr}
& \text { Forward } \
\text { Year } & \text { Interest Rate } \
\hline 0 & \text { (today) } 6 \% \
1 & 7 \% \
2 & 9 \% \
3 & 10 \%
\end{array}$ If you have just purchased a 4-year zero-coupon bond, what would be the expected rate of return on your investment in the first year if the implied forward rates stay the same? (Par value of the bond = $1,000)
A) 5%
B) 7%
C) 9%
D) 10%
E) None of the options are correct.

Suppose That All Investors Expect That Interest Rates for the 4