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Suppose that the yield on a two year treasury security is 5.84%, and the yield on a five year treasury security is 6.46%. Assuming that
Suppose that the yield on a two year treasury security is 5.84%, and the yield on a five year treasury security is 6.46%. Assuming that the pure expectation theory is correct, what is the markets estimate of the two year treasury rate 2 years from now. The error margin will allow either arithmetic or geometric averaging on this question.
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