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4. (10 points) You observe that the yield to maturity on a one-year treasury note is 4% and the yield to maturity on a two-year

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4. (10 points) You observe that the yield to maturity on a one-year treasury note is 4% and the yield to maturity on a two-year treasury note is 7%. Provide an estimate of the one-year interest rate during the second year. the te meenese During the second year rope will be 780 P com 13.1008 1.04 uthig = 1000 (1.07) (1+x) 1.1449 1.07 1000 (14,64) = 1144.4 1.07=148

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