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6 Suppose 1-year Treasury bonds yield 3.30% while 2-year T-bonds yield 5.50%. Assuming the pure expectations theory is correct, and thus the maturity risk premium
6 Suppose 1-year Treasury bonds yield 3.30% while 2-year T-bonds yield 5.50%. Assuming the pure expectations theory is correct, and thus the maturity risk premium for T-bonds is zero, what is the yield on a 1-year T-bond expected to be one year from now? Do not round your intermediate calculations. Round your final answer to 2 decimal places.
a. 3.67% b. 8.00% c. 7.75% d. 5.44% e. 4.40%
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