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2 Points) The annual interest rate on a one-year loan is 8.2% and the annual interest rate on a three-year loan is 6.9%. Assume that

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2 Points) The annual interest rate on a one-year loan is 8.2% and the annual interest rate on a three-year loan is 6.9%. Assume that investors expect the interest rate on a one-year Loan to be 5.5% two years from today (this rate is for one-year loans during year 3). A. What is the exact interest rate (two decimal places) on a two-year loan today? (Hint: This is a two-step calculation. You must first calculate the one-year interest rate, one-year from today). B. What is the shape of the yield curve today? Identify one economic reason (hopefully linked back to the book) that could explain this yield curve shape. 2 Points) The annual interest rate on a one-year loan is 8.2% and the annual interest rate on a three-year loan is 6.9%. Assume that investors expect the interest rate on a one-year Loan to be 5.5% two years from today (this rate is for one-year loans during year 3). A. What is the exact interest rate (two decimal places) on a two-year loan today? (Hint: This is a two-step calculation. You must first calculate the one-year interest rate, one-year from today). B. What is the shape of the yield curve today? Identify one economic reason (hopefully linked back to the book) that could explain this yield curve shape

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