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QUESTION 7 Suppose that the spot interest rate on a one-year zero-coupon bond is 0.5% and the spot interest rate on a two-year zero-coupon bond

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QUESTION 7 Suppose that the spot interest rate on a one-year zero-coupon bond is 0.5% and the spot interest rate on a two-year zero-coupon bond is 1.5%. Based on the pure expectations theory of the term structure of interest rates, what is the expected one-year interest rate starting in one year. Use the approximation from class

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