Find the rates of return for 3 year and 30 year bonds in a

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Find the rates of return for 3 year and 30 year bonds in a steepening rally. Assume two points on the initial yield curve are: 12% for 3 years and 6% for 30 years. Assume the yield curve 1 year later has these two points: 2% for 2 years and 5% for 29 years. What are the 1 year holding period returns for each of these bonds? Do this both for zero coupon bonds and par bonds.

Reference no: EM13389490

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