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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
- the second year (year 2 only)
- the third year (year 3 only)
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