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The yield on a Treasury bond that matures in four year (a four-year bond) is 2.2 percent. Investors expect the 12-month (one-year) interest rate five
The yield on a Treasury bond that matures in four year (a four-year bond) is 2.2 percent. Investors expect the 12-month (one-year) interest rate five years from nowthat is, in Year 5to be 1.2 percent. What should be the yield on a five-year bond (i.e., a bond that matures in five years)?
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