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Applying the expectations theory, a bank depositor chooses between purchasing a one-year CD paying 625 percent and a twoyear CD paying 6.85 percent. If indifferent

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Applying the expectations theory, a bank depositor chooses between purchasing a one-year CD paying 625 percent and a twoyear CD paying 6.85 percent. If indifferent between the two, the depositor must expect one-year CDs one year from now to have a rate of 53 7x 7.45% 4.5\%

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