Question: Compute the two-year nominal interest rate (i2t) using the exact formula and the approximation formula for each set of assumptions listed in the following

Compute the two-year nominal interest rate (i2t) using the exact formula and

Compute the two-year nominal interest rate (i2t) using the exact formula and the approximation formula for each set of assumptions listed in the following tables. The assumptions are in each table's first three columns: they give values for the current one-year interest rate (i1+), next year's expected one-year interest rate (191++ 1), and the term premium on a two-year bond (x). Enter your response for the approximate rate as calculated; for the exact rate, round your response to three decimal places. i1t iet+1 Term Premium Exact i2t Approx. 12t 5% 6% 0% 5.499 % 5.5% Enter your response for the approximate rate as calculated; for the exact rate, round your response to three decimal places. 11t 1+1 Term Premium Exact i2t Approx. 12t 3% 9% 0% % %

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