Question: Based on expectation theory, if the interest rate for a 3-year bond is 8% and the interest rate on a 1-year bond right now is

Based on expectation theory, if the interest rate for a 3-year bond is 8% and the interest rate on a 1-year bond right now is 9%, a one year bond a year from now is 9%, what is the expected one year bond interest rate 2-years from now?

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

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