Question
Suppose the interest rate on a 1-year T-bond is 5.0% and that on a 2-year T-bond is 5.7%. Assuming the pure expectations theory is correct,
Suppose the interest rate on a 1-year T-bond is 5.0% and that on a 2-year T-bond is 5.7%. Assuming the pure expectations theory is correct, what is the market's forecast for 1-year rates 1 year from now?
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International Finance Theory and Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
10th edition
978-0133425895, 133425894, 978-0133423631, 133423638, 978-0133423648
