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If Three-Year Securities Are Yielding 6% and Two-Year Securities Are

Question 38

Multiple Choice

If three-year securities are yielding 6% and two-year securities are yielding 5.5%, what is the expected one-year rate two years from now as implied by the two actual rates above?


A) 4.7%
B) 5.8%
C) 6.5%
D) 7.0%
E) 7.5%

Correct Answer:

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