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Assume that the Pure Expectation Theory determines interest rates in the markets. Today's market rates for different maturities follow an interesting pattern. The spot rate
Assume that the Pure Expectation Theory determines interest rates in the markets. Today's market rates for different maturities follow an interesting pattern. The spot rate for investing for year is After that, the rate increases by for each year. So in general, the rate for year Y is simply Y
Given this information, what is the implied interest rate to invest for year, starting in years?
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