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Suppose the interest rate on a 1-year T-bond is 5.0% and that on a 2-year T-bond is 5.7%. Assuming the pure expectations theory is correct, what is the market's forecast for 1-year rates 1 year from now?
O 5.83%
O 4.93%
O. 7.94%
O 6.40%
O 6.79%

Answer :

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