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The current yield curve for default-free zero-coupon bonds is as follows: Maturity (years) YTM 1...

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Finance

The current yield curve for default-free zero-coupon bonds is as follows: Maturity (years) YTM 1 9.7 % 2 10.7 3 11.7 a. What are the implied one-year forward rates? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will the pure yield curve (that is, the yields to maturity on one- and two-year zero-coupon bonds)

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