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Assume that the pure expectations theory of the term structure is correct. ( This implies that you can use the yield curve provided to back
Assume that the pure expectations theory of the term structure is correct. This implies that you can use the yield curve provided to back out the markets expectations about future interest rates. What does the market expect will be the interest rate on year securities one year from now? What does the market expect will be the interest rate on year securities two years from now? Calculate the yields using geometric averages. r r x r x rr r r x r x rr
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