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3. (7points) Suppose you notice in today's newspaper that the yields available on 1-year, 3-year According to the expectation hypothesis theory, what does the market

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3. (7points) Suppose you notice in today's newspaper that the yields available on 1-year, 3-year According to the expectation hypothesis theory, what does the market believe that 2-year bond yield next year (R'2014) and 4-year bond yield 3 years from now (R'2016)? (you are asked to illustrate in detail how you get your answers using the concepts of B.H.S. an Explanations are what count!) d R.o.S

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