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[8.1 Mark 4] Today's one-year zero rate is 6.50% pa. The unanimous forecast among bond dealers is that, a year from today, the term structure

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[8.1 Mark 4] Today's one-year zero rate is 6.50% pa. The unanimous forecast among bond dealers is that, a year from today, the term structure of interest rates will be: 7.00% pa (for 1 year), 9.15% pa (for 2years) and 10.00% pa (for 3 years). Assume that the pure expectations theory of the term structure is correct. What is today's term structure? That is wha are today's interest rates (pa) for terms of 1, 2, 3 and 4 years? Show your calculations

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