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Answer to Question #36414 in Management for Arianna
Question #36414
Assume that the expectations theory of term structure holds. If the rate on a two-year Treasury bond is 8% and the rate on a three-year Treasury bond is 7%, what is the expected rate on a one-year Treasury bond in year three?
A. 8%
B. 7%
C. 6%
D. 5%
E. 4%
A. 8%
B. 7%
C. 6%
D. 5%
E. 4%
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