Question
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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Exchange Rates and International Finance
Authors: Laurence Copeland
6th edition
273786040, 978-0273786047
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