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The following are the yields on three treasury bonds: Type of Bond Yield 1 year 0.2% 2 year 0.3 3 year 0.5 Using expectations theory,

The following are the yields on three treasury bonds:

Type of Bond

Yield

1 year

0.2%

2 year

0.3

3 year

0.5

Using expectations theory, compute the expected one-year interest rates in

  1. the second year (year 2 only)
  2. the third year (year 3 only)

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