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Suppose the interest rate on a 1-year T-bond is 5.80% and that on a 2-year T-bond is 7.90%. Assuming the pure expectations theory is correct,

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Suppose the interest rate on a 1-year T-bond is 5.80% and that on a 2-year T-bond is 7.90%. Assuming the pure expectations theory is correct, what is the market's forecast for 1-year rates 1 year from now? Do not round your intermediate calculations. Round your final answer to 2 decimal places. a. 6.75% b. 7.82% c. 6.85% d. 10.04% e. 10.62%

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