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1. Assume that the assumptions of the Expectations Hypothesis are true and that today's one-year risk-free rate is 6%. Moreover, investors expect that the one
1. Assume that the assumptions of the Expectations Hypothesis are true and that today's one-year risk-free rate is 6%. Moreover, investors expect that the one year rate one year from now will be 5% and the one year rate two years from now will be 7%. Given this information, what should be today's three-year risk-free rate? Be precise, and round your percentage (%) to three decimals (.001) on your calculator!
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