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Suppose we observe the 3 - year Treasury security rate ( R 3 1 ) to be 8 percent, the expected 1 - year rate
Suppose we observe the year Treasury security rate R
to be percent, the expected year rate next year Er
to be percent, and the expected oneyear rate the following year Er
to be percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the year Treasury security rate, R
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