Question: Suppose that the current 1 - year, 2 - year, and 3 - year interest rates are: 0 i 1 = 4 % , 0

Suppose that the current 1-year, 2-year, and 3-year interest rates are: 0i1=4%,0i2=5%,0i3=6%. Then according to
the expectations theory, the 1-year interest rate two years from now is expected to be
a.5%
b.6%
c.8%
d.10%

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