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In an ideal market the one-year spot rate is 6%, and the two year spot rate is 5%. a) A bank offers for a bank
In an ideal market the one-year spot rate is 6%, and the two year spot rate is 5%. a) A bank offers for a bank account starting one year in the future and ending two years in the future an interest rate of 3.5%. Explain an investment strategy that allows you to earn money without risk. b) Same as (a) but the bank offers an interest rate of 4.5%.
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