Find the announcement six-month rate

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Suppose the Fed increases the federal funds rate from 3 to 3.5% and announced its intention to increase again by 0.5% again in 6 months. There is a 1% risk premium on the one-year rate. After the announcement the six-month rate remains unchanged but the one-year rate jumps. Which of the following is consistent with this scenario?

Reference no: EM132587874

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