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  3. the yield to maturity on one-year zero-coupon bond

The yield to maturity on one-year zero-coupon bonds is 7.2%. The yield to maturity on...

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Accounting

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The yield to maturity on one-year zero-coupon bonds is 7.2%. The yield to maturity on two-year zero-coupon bonds is 8.2%. Required: a. What is the forward rate of interest for the second year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If you believe in the expectations hypothesis, what is your best guess as to the expected value of the short-term interest rate next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. If you betieve in the liquidity preference theory, is your best guess as to next year's short-term interest rate higher or lower than in (b)? Lower Higher

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