Which bond will have the highest return over the first year

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Reference no: EM131893229

1. The two-year spot rate is 4% and the four-year spot rate is 5%. You can buy a two-year zero coupon bond or a four-year zero coupon bond. Which bond will have the highest return over the first year?

A. The two-year zero.

B. The four-year zero.

C. Both zeros will have the same return over the first year.

2. You have one-year, three-year, and four-year spot rates. Which of the following forward rates cannot be computed from this information.

A. Three-year loan beginning in one year

B. Two-year loan beginning in two years

C. Two-year loan beginning in one year

D. One-year loan beginning in three years

Reference no: EM131893229

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