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What is the annual rate of return on 2 year bonds

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Reference no: EM132294148

Suppose pure expectations theory is correct. You can buy a 2-year discount bond with face value %1500 for $1360.54. You plan to sell it next year for a price you expect will be $1456.31.

a. What is the annual rate of return on 2 year bonds?

b. What is the rate of return on 1 year discount bonds you expect will hold next year?

c. what is the rate of return on one year bonds today?

Reference no: EM132294148

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