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The Current Rate of Return on a One-Year U

Question 156

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The current rate of return on a one-year U.S.Government security is 3%.The rate of return on a two-year U.S.Government security is 5%.According to the expectations theory,what is the return on a one-year U.S.Government security purchased one year from today?

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$1,000 × 1.03 = $1,030 at the ...

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