5. Pure expectations theory The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short-term interest rates Based on the pure expectations theory, is the following statement true or false? The pure expectations theory assumes that investors do not consider long-term bonds to be riskler than short-term bonds. True False The yield on a one-year Treasury security is 5.6100%, and the two-year Treasury security has a 7.5735% yield. Assuming that the pure expectations theory is correct, what is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) 8.1375 10.9138% 12.15814 Recall that on a one-year Treasury security the yield is 5.6100 and 7.5735% on a two-year Treasury security. Suppose the one-year secunty does not have a maturity risk premium, but the two-year security does and it is 0.3%. What is the markets estimate of the sne-year Treasury rate one Year from now? (Note: Do not round your intermediate calculations.) 5.9932 The yield on a one-year Treasury security is 5.6100%, and the two-year Treasury security has a 7.5735% yield. Assuming that the pure expectations theory is correct, what is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) O 8.1375% 9.5735% O 10.9138% 12.1583% Recall that on a one-year Treasury security the yield is 5.6100% and 7.5735% on a two-year Treasury security. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and its 0.3%. What is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) D 8.96324 11.3633% 10.218% 7,6187% Suppose the Vield on a two-year Treasury security is 5.83%, and the yield on a five-year Treasury security & 6.207. Assuming that the pure expectations theory is correct, what is the market's estimate of the three-year Treasury rate two years from now? (Note: Do not round your Intermediate calculations.) 6.45% 6.5397 6.61