Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:

1R1 = 6%, E(2r1) = 7%, E(3r1) = 7.5%, E(4r1) = 7.85%

Using the unbiased expectations theory, calculate the current (longterm)

rates for one-, two-, three-, and four-year-maturity Treasury securities. Plot the resulting yield curve. (LG 2-7)