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Currently the yield on 1- year bills is 4%. The consensus expectation is that next year...

Currently the yield on 1- year bills is 4%. The consensus expectation is that next year 1 -year bills will yield 3%, and the year following 2%. a. If the pure expectations model of interest rates applies, what do 2- year notes now yield? b. What do 3- year note s now yield? c. Based on your answers, what does the slope of the yield curve tell you about market expectations for the future course of short -term inter est rates?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASEv ( 05-23 ENG 26-02-2020 19 E1740 2 EE 719 EF EG EH EL EJEK EL EM EN EO - 1R1 E(2r1) E(3r1) 4.00% 3.00% 2.00% 1R2= 1R3 = ((1+

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