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The yield on a 1-year zero coupon bond selling today is 2%. The market expects that similar bonds sold in one years time will yield

The yield on a 1-year zero coupon bond selling today is 2%. The market expects that similar bonds sold in one years time will yield 3%. According to the expectations theory, a 2-year zero coupon bond for sale today should have a yield of:

2.5%

2.75%

3.0%

5.0%

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