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The one-year spot interest rate is r 1 = 4.30% and the two-year interest rate is r 2 = 5.80%. If the expectation theory is
The one-year spot interest rate is r1 = 4.30% and the two-year interest rate is r2 = 5.80%. If the expectation theory is correct, what is the expected one-year interest rate in one year's time?
Question 30 options:
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7.32%.
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2.82%.
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10.35%.
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9.18%.
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