A commercial bank made a five-year term loan at 13 percent. The bank's economics department forecasts that
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A commercial bank made a five-year term loan at 13 percent. The bank's economics department forecasts that one and three years in the future, the two-year interest rate will be 12 percent and 14 percent, respectively. The current one-year rate is 7 percent. Given that the bank's forecast is reliable, has the bank set the five-year rate correctly?
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Related Book For 
Financial Institutions, Markets And Money
ISBN: 1704
12th Edition
Authors: David S. Kidwell, David W. Blackwell, David A. Whidbee, Richard W. Sias
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