What is the expected rate of return next year on a one-year

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Question - Suppose the expectations hypothesis is true. The current rate of return on a one-year bond is? 3%, and the current rate of return on a 2-year bond is? 2.5%. What is the expected rate of return next year on a one-year ?bond?

A. ?2%

B. ?1%

C. ?0.5%

D. ?1.5%

Reference no: EM132995263

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