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If 1-year rates are 5 percent, 1-year rates one year from now are expected to be 5.75 percent, and 1-year rates two years from now are expected to be 6.25 percent, then the unbiased expectations theory of interest rates would indicate current 3-year rates should be closest to: A. 8.75%. B. 5.29%. C. 6.37%. D. 5.67%. |