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Unbiased Expectations Theory Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1=4.75%, E(2r1) =5.75%, E(3r1) =6.25%, E(4r1)=6.60% Using the unbiased expectations theory, what is the current (long-term) rate for four-year-maturity Treasury securities?

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Financial Management, Finance

Category:- Financial Management
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