Calculate the expected expectations yields

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Given the following yield information on municipal bonds issued by the state of North Dakota:

1-year note yield = 2.35%

2-year note yield = 2.75%

3-year note yield = 3.29%

4-year note yield = 3.95%

5-year note yield = 4.33%

Given constant premiums of 0, .16%, .21%, .24%, .26%, and .265%.

a) Calculate the expected expectations yields for a (3,2) path.

b) Calculate the expected market yields for a (1,4) path.

c) Determine the expected preferred habitat yield for a 3-year note purchased at the beginning of year 2.

d) Determine the expected expectations yield on a 5-year note purchased today.

Reference no: EM133081795

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