5

Suppose that the yield on a two-year Treasury security is 5.84%, and the yield on a five-year Treasury security is 6.70%. Assuming that the pure expectation theory is correct, what is the market's estimate of the three-year Treasury rate two years from now? The error margin will allow either arithmetic or geometric averaging on this question. Your answer should be between 5.58 and 7.98 , with no special characters. You may round to 4 decimal places if you wish, but only 2 decimal places are necessary for a correct