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Suppose the following yield curve: Maturity (=Term to Maturity) 1 year 2 year 3 year 4 year 5 year Yield 6.0% 6.2% 6.4% 6.5% 6.5%
Suppose the following yield curve:
Maturity (=Term to Maturity) 1 year 2 year 3 year 4 year 5 year
Yield 6.0% 6.2% 6.4% 6.5% 6.5%
If the pure expectation theory holds, what does the market expect will be the interest rate on 3-year bond, 2 years from now? (pick the closest)
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