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Consider the expectations theory of the term structure. Suppose the 1- period interest rate today is 3 percent and that the 2-period interest rate today

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Consider the expectations theory of the term structure. Suppose the 1- period interest rate today is 3 percent and that the 2-period interest rate today is 2.5 percent. What is the expected 1-period interest rate for the next year (or period)? 2.5 percent O2 percent O5.5 percent 3 percent

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