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Suppose we observe the following rates: _(1)R_(1)=9%,_(1)R_(2)=11%. If the unblased expectations theory of the term structure of interest rates holds, what is the 1-year interest
Suppose we observe the following rates: _(1)R_(1)=9%,_(1)R_(2)=11%. If the unblased expectations theory of the term structure of interest rates holds, what is the 1-year interest rate expected one year from now, E(_(2)r_(1)) ? Note: Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34)
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