Suppose we observe the following rates 1r1 45 1r2 62 if, Financial Management

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Suppose we observe the following rates 1r1 45 1r2 62 if

Suppose we observe the following rates: 1R1 = 4.5%, 1R2 = 6.2%. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year interest rate expected one year from now, E(2r1)? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

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Financial Management: Suppose we observe the following rates 1r1 45 1r2 62 if

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