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What Is the Yield to Maturity of a 3-Year Zero-Coupon

question 39

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What is the yield to maturity of a 3-year zero-coupon bond? Suppose that all investors expect that interest rates for the 4 years will be as follows:  Forward  Year  Interest Rate 0 (today)  3%14%25%36%\begin{array}{lr}& \text { Forward } \\\text { Year } & \text { Interest Rate } \\\hline 0 & \text { (today) } 3 \% \\1 & 4 \% \\2 & 5 \% \\3 & 6 \%\end{array}


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