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Assume that the 1 - year rate i s 4 % and the 2 - year rate i s 6 % . The implied 1

Assume that the

1 -

year rate

i s 4 %

and the

2 -

year rate

i s 6 % .

The implied

1 -

year rate,

1

year from today

according

t o

the expectations theory

i s

closest

t o

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