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Suppose the yield on a one-year bond with no credit risk is 3.2% and the yield on a 3-year bond with no credit risk is

Suppose the yield on a one-year bond with no credit risk is 3.2% and the yield on a 3-year bond with no credit risk is 3.5%.

Discuss what the Expectations Theory can and cannot explain about the time structure of the interest rates.

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