If you have 1-year rate is 8%, 2-year rate is 9%, and 3-year rate is 10%. Assume that the pure expectations theory for the term structure of interest rates holds, no liquidity or maturity premium exists. What is implied 1 year rate 2 year from now?
a. 9%
b. 10%
c. 11%
d. 12%
Answers: 3
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If you have 1-year rate is 8%, 2-year rate is 9%, and 3-year rate is 10%. Assume that the pure expec...
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