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A two year zero coupon bond has a YTM of 4%. The forward rate for the 12-month period beginning in one year and ending two
A two year zero coupon bond has a YTM of 4%. The forward rate for the 12-month period beginning in one year and ending two years from now is based on the following expectations: inflation of 2.5% and a real rate of 2%. What is the one year spot rate?
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