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Assume that as of today, the annualized interest rate on a three-year security is 2 percent, while the annualized interest rate on a two-year security

Assume that as of today, the annualized interest rate on a three-year security is 2 percent, while the annualized interest rate on a two-year security is 1.25 percent. Use this information to estimate the one-year forward rate two years from now.

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