Suppose That All Investors Expect That Interest Rates for the 4

question 33

Multiple Choice

Suppose that all investors expect that interest rates for the 4 years will be as follows: $\begin{array}{lr}& \text { Forward } \\\text { Year } & \text { Interest Rate } \\\hline 0 & \text { (today) } 6 \% \\1 & 7 \% \\2 & 9 \% \\3 & 10 \%\end{array}$ 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 are correct.

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