What are the expected one year interest rates year

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Suppose that the yield curve show that the one year bond yield is 4 percent, the two yield is 4 percent, and the three year is 5 percent. Assume that the risk premium on the one year bond is zero, the risk premium on the two year bond is 1 percant, and the risk premium on the three year bond is 2 percent.

What are the expected one year interest rates year and the following year?

Reference no: EM131197981

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