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Consider the following spot interest rates for maturities of one, two, three, and four years....

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Finance

Consider the following spot interest rates for maturities of one, two, three, and four years. r1=2.73% r2=3.06% r3=4.04% r4=3.13% If inflation in year 3 is expected to be 2.17 percent, what real rate (in percent) does this imply for year 3? Use the exact Fisher formula and expectations theory. Answer to two decimals, carry intermediate calcs. to four decimals.

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