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Problem 6 - 1 3 Unbiased Expectations Theory ( LG 6 - 7 ) Suppose we observe the following rates: ? 1 R 1 =

Problem 6-13 Unbiased Expectations Theory (LG6-7)
Suppose we observe the following rates: ?1R1=4%,?1R2=5%. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year interest rate expected one year from now, E(2r1)?
Note: Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e.,0.1234 should be entered as 12.34).
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