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Expected one-year interest rates

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The interest rate on one-year Treasury bonds is 0.4 percent, the rate on two-year T-bonds is 0.8 percent, and the rate on three-year T-bonds is 1.1 percent. Using the expectations theory, compute the expected one-year interest rates in (a) the second year (year 2 only) and (b) the third year (year 3 only)

Reference no: EM131038457

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