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Suppose that the interest rate on one-year bonds is currently 5 percent and is expected to be 3 percent in one year and 3 percent
Suppose that the interest rate on one-year bonds is currently 5 percent and is expected to be 3 percent in one year and 3 percent in two years. Using the expectations hypothesis, compute the yield curve for the next three years. Instructions: Enter your responses rounded to the nearest two decimal places. Yield for one-year bond Yield for two-year bond = 0 % % Yield for three-year bond = %
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