The interest rate on two-year Treasury bonds is 1.2 percent, the rate on three-year T-bonds is 1.4
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The interest rate on two-year Treasury bonds is 1.2 percent, the rate on three-year T-bonds is 1.4 percent, and the rate on four-year T-bonds is 1.9 percent. Using the expectations theory, compute the expected one-year interest rates in
(a) The third year (Year 3 only)
(b) The fourth year (Year 4 only).
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