Assume the current interest rate on a one-year Treasury bond ( 1R1 ) is 4.50 percent, the
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Assume the current interest rate on a one-year Treasury bond ( 1R1 ) is 4.50 percent, the current rate on a two-year Treasury bond ( 1R2 ) is 5.25 percent, and the current rate on a three-year Treasury bond ( 1R3 ) is 6.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the one-year interest rate expected on Treasury bills during year 3 ( E ( 3r1 ) or 3 f1 )? ( LG 2-8 )
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Financial Markets And Institutions
ISBN: 9780078034664
5th Edition
Authors: Anthony Saunders, Marcia Cornett
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