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Assume that as of today, the annualized interest rate on a three-year security is 8 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 8 percent, while the annualized interest rate on a two-year security is 6 percent. Use only this information to estimate the one-year forward rate two years from now.
You need to choose between investing in a one-year municipal bond with a 6 percent.
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