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Suppose we observe the following rates: (_(1))/(b)ar (R)_(1)=5.4%,_(1)R_(2)=7.9% . If the unbiased expectations theory of the term structure of interest rates holds, what is the
Suppose we observe the following rates:
(_(1))/(b)ar (R)_(1)=5.4%,_(1)R_(2)=7.9%
. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year interest rate expected one year from now,
E(2^(r))^(2)
? (Do not round intermediate calculations. Round your percentage answer to
2\\\\deg
decimal places. (e.g., 32.16))\ Expected one-year interest rate
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