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Given one-year spot rate r 1 = .050 and two-year spot rate r 2 = .054, what can you deduce about investor's expectations of future

Given one-year spot rate r1 = .050 and two-year spot rate r2 = .054, what can you deduce about investor's expectations of future one-year interest rates? 

 

A) Investors expect future one-year rates to be equal to current one-year rates.

B) Investors expect future one-year rates to be greater than current one-year rates.

C) No relations at all

D) Investors expect future one-year rates to be less than current one-year rates.


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