Over the Next Three Years,the Expected Path of 1-Year Interest

question 42

Multiple Choice

Over the next three years,the expected path of 1-year interest rates is 4,1,and 1 percent. The expectations theory of the term structure predicts that the current interest rate on 3-year bond is

• A)1 percent.
• B)2 percent.
• C)3 percent.
• D)4 percent.

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