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A 2-year T-bond rate is 5% (= 1 R 2 ) while a 1-year is 6% (= 1 R 1 ). Use this to estimate

A 2-year T-bond rate is 5% (=₁R₂) while a 1-year is 6% (=₁R₁). Use this to estimate the implied (forward) 1-year rate in year 2 (=₂f₁).

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