You Find That the Yield on a 4-Year Bond Is

question 33

Multiple Choice

You find that the yield on a 4-year bond is 10% while that of a 2-year bond is 8%.What should be the yield on a 2-year bond beginning two years from now as predicted by the expectations' theory?

• A) 2.00%
• B) 12.04%
• C) 25.25%
• D) none of the above

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