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Assume only two annual periods and only two possible investments available that must (because of arbitrage) generate identical end of period wealth, and given

Assume only two annual periods and only two possible investments available that must (because of arbitrage) generate identical end of period wealth, and given the expectations hypothesis and perfect capital markets, consider if the one year spot rate is 50%, and the one year forward rate one year from now is 50%, what is the two year spot rate?

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