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October 2nd, 2012, 11:40 AM   #1
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Finance

The government currently promises a return of 6% annually on a one year bond and 4% annually on a two year bond. What is your expectation for the interest rate you would receive on a one year government bond one year from now?
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October 2nd, 2012, 11:48 AM   #2
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Re: Finance

1.04^2/1.06-1 or a little more than 2%.
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