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Question 3 (15 Points) a. Assume that, as of today, the annualized two-year interest rate is 0.856 percent and the one-year interest rate is 0.650
Question 3 (15 Points) a. Assume that, as of today, the annualized two-year interest rate is 0.856 percent and the one-year interest rate is 0.650 percent. Use this information to estimate the one-year forward rate. (b) Assume that, as of today, the annualized interest rate on a three-year security is 1.450 percent and the annualized interest rate on a two-year security is 1.25 percent. Use this information to estimate the one- year forward rate two years from now
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