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b. You think that short-term interest rates will rise over the next year.In particular, you think that the 1-year and the 2-year rates will be
b. You think that short-term interest rates will rise over the next year.In particular, you think that the 1-year and the 2-year rates will be higher than they are currently.If you invest in the two-year now and sell it in one year, will your return be higher or lower than what you could get by investing in the one-year and holding it until maturity?If it depends, what does it depend upon?
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