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Unbiased expectations theory ) Currently you have $ 5 0 , 0 0 0 that you would like to invest for 2 years and are
Unbiased expectations theory Currently you have $ that you would like to invest for years and are considering buying a government security maturing in year that pays annually. If you do this, you will also have to purchase anotheryear security at the end of the first year. The alternative is to invest in a government security that matures in years; currently,year government securities are paying annually. If you invest your money for year and then after year reinvest it for another year, what rate will you have to earn in order to make the two alternatives equal?
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