If the unbiased expectations theory of the term structure


Suppose we observe the following rates: 1R1 = 9%, 1R2 = 11%. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year interest rate expected one year from now, E(2r1)?

(Do not round intermediate calculations and round your answer to the nearest whole percent.)

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Financial Management: If the unbiased expectations theory of the term structure
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