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Suppose that the interest rate on a one-year bond is 3.5% today and interest rates expected on one year bonds in the future are 4.25%
Suppose that the interest rate on a one-year bond is 3.5% today and interest rates expected on one year bonds in the future are 4.25% in one year, 5.25% in two years and 6.2 % in three years.
If the term premium is equal to 0.90 percent, what are the interest rates today for 1) two-year bond, 2) three year bond; 3) four year bond.
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