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Suppose you are risk-neutral and don't care about liquidity. If the 3-year zero coupon bond...

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Finance

Suppose you are risk-neutral and don't care about liquidity. If the 3-year zero coupon bond YTM is 3% and the 4-year zero coupon bond YTM is 2.5%, and you expect the 1-year rate between years 3 and 4 will be 2.5%, then

Question 2 options:

you should buy the 3-year zero

you should buy the 4-year zero

you would be indifferent between the two

Answer & Explanation Solved by verified expert
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