Assume that the expectations theory holds

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Assume that the expectations theory holds, and that liquidity and maturity risk premiums are zero. If the annual rate of interest on a 2-year Treasury bond is 5.1 percent and the rate on a 1-year Treasury bond is 3 percent, what rate of interest should you expect on a 1-year Treasury bond one year from now?

Reference no: EM13729390

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