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Which answer is correct? If the one-year spot rate is 1.8 per cent, and two-year spot rate is 2 per cent, the expectations theory of

Which answer is correct?

If the one-year spot rate is 1.8 per cent, and two-year spot rate is 2 per cent, the expectations theory of the term structure predicts that

the one-year spot rates one year from now will be:

a) 1.80

b) 1.9

c) 2.0

d) 2.2

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