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Suppose the interest rate on a 1 - year T - bond is 5 . 1 0 % and that on a 2 - year

Suppose the interest rate on a 1-year T-bond is 5.10% and that on a 2-year T-bond is 6.50%. Assume that the pure expectations theory is NOT valid, and the MRP is zero for a 1-year T-bond but 0.40% for a 2-year bond. What is the yield on a 1-year T-bond expected to be one year from now? Do not round your intermediate calculations. Round your final answer to 2 decimal places.
a.7.92%
b.5.60%
c.6.07%
d.7.11%
e.5.74%

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