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Question 3 Under the expectations hypothesis of future interest rates, what would be the interest rate of a one-year gilt in exactly one year from

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Question 3 Under the expectations hypothesis of future interest rates, what would be the interest rate of a one-year gilt in exactly one year from now if the interest rates on one-year gilts and two-year gilts are 3% and 3.5% respectively? (10 marks)

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