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A recent edition of The Wall Street Journal reported interest rates of 7.25 percent, 7.60 percent, 7.98 percent, and 8.25 percent for 3-, 4-,
A recent edition of The Wall Street Journal reported interest rates of 7.25 percent, 7.60 percent, 7.98 percent, and 8.25 percent for 3-, 4-, 5-, and 6-year Treasury security yields, respectively. According to the unbiased expectation theory of the term structure of interest rates, what are the expected 1-year forward rates for years 4, 5, and 6? Note: Do not round intermediate calculations. Round your percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34). Years Forward Rates 4 % 5 % 6 %
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