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The current required yields on one- and two-year government bonds are i1 = 12% and i2 = 13%. What are the market's expectations of the

The current required yields on one- and two-year government bonds are i1 = 12% and i2 = 13%. What are the market's expectations of the one-year forward rate, f1 (round to two decimals)?

a.

14.00%

b.

15.00%

c.

13.50%

d.

14.50%

Clear my choice

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