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Over the next three years, the expected path of 1-year interest rates is 4.1, and 1 percent. Today if you buy $1 of one-year bond

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Over the next three years, the expected path of 1-year interest rates is 4.1, and 1 percent. Today if you buy $1 of one-year bond and when it matures you use the money you receive to buy another one-year bond, then your expected rate of return for this $1 investment is % (round to the nearest integer). If the expectations theory of the term structure is true, then it implies that the current interest rate on 2-year bond must be _______% (round to one decimal place x.x). Blank # 1 Blank # 2

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