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Term structure of interest rates-expectations theory

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Reference no: EM131317498

CLASS: Investments

TOPIC : Term Structure of Interest Rates: Expectations Theory: Forward and SpotRates.

QUESTION: Given the yield on a 7 year zero-coupon bond is 7%, yield on a 2 year strip is 5%, and forward two-year rate of 8% in year 5 (aka R5-7), what must be the forward three-year rate in year 2 (akaR2-5)?

Reference no: EM131317498

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