Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Deriving Current Interest Rates. Assume that interest rates for one-year securities are expected to
be 0.05 today, 0.02 one year from now and 0.03 two years from now. Using only the pure
expectations theory, what are the current interest rates on three-year securities. Enter the answer
as a decimal using 4 decimals (e.g. 0.1234).
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