Explain an unbiased expectations theory
Discuss the below:
Q: Suppose we observe the following rates: _1R_1 7%, _1R_2 9%. 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(_2r_1)
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Suppose we observe the following rates: _1R_1 7%, _1R_2 9%. If the unbiased expectations theory of the term structure of interest rates holds
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