Multiple Choice
Assume that the expectations theory of term structure holds.If the rate on a two-year Treasury bond is 8% and the rate on a three-year Treasury bond is 7%,what is the expected rate on a one-year Treasury bond in year three?
A) 8%
B) 7%
C) 6%
D) 5%
E) 4%
Correct Answer:
Verified
Correct Answer:
Verified
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