The one year spot rate is currently 4 percent, the one year spot rate one year from now will be 3 percent, and the one year spot rate two years from now will be 6 percent. Under the unbiased...


The one year spot rate is currently 4 percent, the one year spot rate one year from now will be 3 percent, and the one year spot rate two years from now will be 6 percent. Under the unbiased expectations theory, what must today's three year spot rate be? Supposed the three year spot rate is actually 3.75 percent, how could you take advantage of this? Explain.



Jun 08, 2022
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