1. f the current interest rate on a 1-year bond is 2.80% while market participants expect a 1-year interest rate of 1.30% next year, then the expectations theory predicts that the interest rate on a 2-year bond will be ___ %: 2. If the current 1-year interest rate is 3% and the current interest rate on a 2-year bond is 4%, what is the expected 1-year rate starting a year from today? 3. You observe that currently, a 1-year bond has an interest rate of 3.00% while a 2-year bond has an interest rate of 3.00%. This means that, according to the expectations theory (no liquidity premium), market participants expect the 1-year interest rate in one year from now to be ___%:
1. f the current interest rate on a 1-year bond is 2.80% while market participants expect a 1-year interest rate of 1.30% next year, then the expectations theory predicts that the interest rate on a 2-year bond will be ___ %: 2. If the current 1-year interest rate is 3% and the current interest rate on a 2-year bond is 4%, what is the expected 1-year rate starting a year from today? 3. You observe that currently, a 1-year bond has an interest rate of 3.00% while a 2-year bond has an interest rate of 3.00%. This means that, according to the expectations theory (no liquidity premium), market participants expect the 1-year interest rate in one year from now to be ___%:
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter15: Monetary Policy
Section: Chapter Questions
Problem 12QP
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1. f the current interest rate on a 1-year bond is 2.80% while market participants expect a 1-year interest rate of 1.30% next year, then the expectations theory predicts that the interest rate on a 2-year bond will be ___ %:
2. If the current 1-year interest rate is 3% and the current interest rate on a 2-year bond is 4%, what is the expected 1-year rate starting a year from today?
3. You observe that currently, a 1-year bond has an interest rate of 3.00% while a 2-year bond has an interest rate of 3.00%. This means that, according to the expectations theory (no liquidity premium), market participants expect the 1-year interest rate in one year from now to be ___%:
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