Mathematics, 13.11.2019 04:31 lilybrok04

Assume that the rate on a 1-year bond is now 6%, but all investors expect 1-year rates to be 7% one year from now and then to rise to 8% two years from now. assume also that the pure expectations theory holds, hence the maturity risk premium equals zero. which of the following statements is correct?

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Assume that the rate on a 1-year bond is now 6%, but all investors expect 1-year rates to be 7% one...

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