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QUESTIONS Suppose that the spot interest rate on a one-year zero-coupon bond is 1%, and the spot interest rate on a two-year zero-coupon bond is
QUESTIONS Suppose that the spot interest rate on a one-year zero-coupon bond is 1%, and the spot interest rate on a two-year zero-coupon bond is 2%. Suppose also that you expect the one- year interest rate starting in one year to be 1%. Relative to the market expectations, do you think a recession is more likely or less likely? a. More likely b. Less likely
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