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A 5-year Treasury bond currently offers a 7% rate of return. A 6-year Treasury bond offers a 39% rate of return. The inflation rate in
A 5-year Treasury bond currently offers a 7% rate of return. A 6-year Treasury bond offers a 39% rate of return. The inflation rate in fifth year is 1 %.Under the expectations theory, what rate of return do investors expect a four year Treasury bond to pay during the fifth year? Please provide complete details of the calculations (formula/steps) of the above question
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