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You are a bond investors, currently observing the possible return from bond market. You have observed that current 1 year's bond offer 5% yield while
You are a bond investors, currently observing the possible return from bond market. You have observed that current 1 year's bond offer 5% yield while expected forward rate from period 1 through period is expected to be 7%. Using expectation theory of interest rate determination, calculate the yield for 2 years bond.
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