Question: Based on expectation theory, if the interest rate for a 4-year bond is 10% and the interest rate on a 1-year bond right now is

Based on expectation theory, if the interest rate for a 4-year bond is 10% and the interest rate on a 1-year bond right now is 9%, a one year bond a year from now is 9%, and a one year bond two years from now is 11%, what is the expected one year bond interest rate three years from now?

Answer this questions using the simplified averaging assumption from page 95.

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