6. Pure expectations theory The pure expectations theory, or the expectations hypothesis, asserts that lang-term interest rates can be used to estimate fiture short-term interest rates. Based on the pure expectations theory, is the foliowing statement true or fabe? A certificate of deposit (CD) for two yeors will have the same yield as a CD for one year followed by an itwestment in another one-year. CD after one year. True. False The yield on a one-year Treasury security is 4.2300%, and the two-year Tredsury security has a 5.7105% yiald. Assuining that the pure expectablons theopy is corrnot, what is the market's sestimate of the one-year Treasury inte one vear from now? (Note. Do not round your intermediate calculations) 7.2124 8.22174 6.1302% 9.15928 Recall that on a one-year Treasury security the vield is 4.2300% and 5.7105% on a two-year Treasury security. Suppose the one-ycar security dees not have a maturity risk premium, but the two-year security does and it is 0.25%. What is the market's estimate of the one-year Treagury rate one year from now? (Note: Do not round your intermediate calculations.) 8.516146 5.699846 6.7056% 7.6444% Suppose the yield on a two-year Treasury secunity is 5.83%, and the yield on a five-year Treasury security is 6.20%. Assuming that the pure expectations theory is correct, what is thie markit's estmate of the three year Treasury rate two years from now? (Note: Do not round your intermediate calculationsi) 7.109 6.69% 5.46% 6.45%