You find that the yield on a 6-year bond is 12% while that of a 4-year bond is 9%.What should be the yield on a 2-year bond beginning four years from now as predicted by the expectations' theory?

Name: You find that the yield on a 6-year bond is 12% while that of a 4-year bond is 9%.What should be the yield on a 2-year bond beginning four years from now as predicted by the expectations' theory?
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(1.12)⁶ = (1.09)⁴ ´ (1 + r)²====> (1.12)⁶ /(1.09)⁴= (1 + r)² =====> r = .1825

You Find That the Yield on a 6-Year Bond Is