PURE EXPECTATIONS THEORY The yield on 1-year Treasury securities is 6%, 2-year securities yield 6 2%, 3-year securities yield 6 3%, and 4-year securities yield 6 5%. There is no maturity risk premium. Using expectations theory and geometric averages, forecast the yields on the following securities:

a. A 1-year security, 1 year from now

b. A 1-year security, 2 years from now

c. A 2-year security, 1 year from now

d. A 3-year security, 1 year from now.

AppendixLO1