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Unbiased expectations theory of the term structure

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Reference no: EM131739844

Suppose we observe the following rates: 1R1 = 7%, 1R2 = 9%. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year interest rate expected one year from now, E(2r1)? (Do not round intermediate calculations and round your answer to the nearest whole percent.)

Reference no: EM131739844

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