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37) Suppose that the current one-year rate is 2.0%, the expected one year rate one year from now is 3%; the expected one year rate
37) Suppose that the current one-year rate is 2.0%, the expected one year rate one year from now is 3%; the expected one year rate two years from now is 4% and the expected one year rate four years from now is 5%. What should the current three year rate be according to the pure expectations theory? a) 2.25% b) 2.45% c) 2.95% d) 3.45% e) None of the above
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