1. Suppose the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three year (i.e. years 2, 3, and 4, respectively) are as follows: R = 6%, E (R) = 7% E(R)=7.5% E(R)=7.85% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year maturity Treasury securities. Plot the resulting yield curve.

1. Suppose the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three year (i.e. years 2,3 , and 4 , respectively) are as follows: 0R1=6%E(1R1)=7%E(2R1)=7.5%E(3R1)=7.85% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year maturity Treasury securities. Plot the resulting yield curve