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he one-year spot interest rate is r1=5.9%, and the two-year rate is r2=6.9%. If the expectations theory is correct, what is the xpected one-year interest
he one-year spot interest rate is r1=5.9%, and the two-year rate is r2=6.9%. If the expectations theory is correct, what is the xpected one-year interest rate in one year's time? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Suppose the term structure of interest rates has these spot interest rates: r1=6.1%,r2=5.9%,r3=5.7%,r4=5.5%, and r5=7.1%. a. What will be the 1-year spot interest rate in three years if the expectations theory of term structure is correct? b. If investing in long-term bonds carries additional risks, then how would the risk equivalent of a 1-year spot rate in three years relate to your answer to part (a)
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