Solution-Unbiased expectations theory of the term structure

Unbiased expectations theory of the term structure

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Suppose we observe the following rates: ₁R₁ = 5%, 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: EM131180518

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Unbiased expectations theory of the term structure

Reference no: EM131180518

Reference no: EM131180518

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