Unbiased expectations theory
Problem:
One year spot rate is 6%, 2nd year forward rate is 7.5% and 3rd year forward rate is 5%.
Required:
Question: What is the three year fixed rate by using unbiased expectations theory?
Note: Please show how to work it out.
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Question: What is the three year fixed rate by using unbiased expectations theory? Note: Please show how to work it out.
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