11. Assume that the yield on a one-year zero-coupon security is currently 1.20% and on a two- year zero-coupon security is currently 1.50%. The market is arbitrage-free. a) What is the implied one-year rate, one year forward? b) According to the pure expectation theory, what do you expect the yield on a one-year U.S. Government security purchased one year from today will be? c) What is the implication of the pure expectation theory based on the results of a) and b)?

Explain Please