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QUESTION
The interest rate on two- year Treasury bonds is 1.2 percent, the rate on three-year T-bonds is 1.4 percent, and the rate on four- year T- bonds is...
The interest rate on two- year Treasury bonds is 1.2 percent, the rate on three-year T-bonds is 1.4 percent, and the rate on four- year T- bonds is 1.9 percent. Using the expectations theory, compute the one year interest rates in the third year.
