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Chapter 6 End-of-Chapter Assignment i Suppose we observe the following rates: 1R1=5%,1R2=9%. If the unbiased expectations theory of the term structure of interest rates holds,
Chapter 6 End-of-Chapter Assignment i Suppose we observe the following rates: 1R1=5%,1R2=9%. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year interest rate expected one year from now, E(2r1) ? Note: Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered 5 as 12.34)
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