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Suppose we observe the three-year Treasury security rate (1R3) to be 5.3 percent, the expected one-year rate next year—E(2r1)—to be 5.8 percent, and the expected one-year rate the following year—E(3r1)—to be 6.2 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year Treasury security rate?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91697796

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