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Suppose the interest rate on a 1-year T-bond is 5.20% and that on a 2-year T-bond is 6.50%. Assume that the pure expectations the
Suppose the interest rate on a 1-year T-bond is 5.20% and that on a 2-year T-bond is 6.50%. Assume that the pure expectations the 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 e a. 7.01% b. 7.82% c. 6.07% d. 5.85% e. 5.65%
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