Allempts 2 Average 2/4 4. Pure expectations theory The pure expectations theory of the expectations hypothesis, asserts that long term interest rates can be und to estimate future short-term interest rates Based on the pure expectations theory, is the following statement true or false? A certificate of deposit (CD) for two years will have the same yield as a CD for one year followed by an investment in another one year CD after one year True The yield on a one-year Treasury security is 5.1400, and the two-year restur security Assuming that the pure expectation theory is correct, what the market's timate of the one year Matury rate one year from now (Note Os not round your intermediate calculation) 13.4071 11.76064 14.9369 Recall that on a one-war Tawury security the yinid 5.1400% and 3.76004 on a two-yes Treasury security Supplies the Year Boxunty does The yield on a one-year Treasury security is 5.8400%, and the two-year Treasury securty has 1.7600% 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.) 13.4071% 9.9965 11.7606% 14.936% Recall that on a one-year Treasury security the yield is 5.1400% and 8.7600% on a two-ye Treasury security. Suppone the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.5%. What is the market's estimate of the one-year Treasury rate one year from now! (Note: Do not found your intermediate calculations.) 13.634 10.354 12.2354% 9.1251 Suppose the yield on a two-year Trenury Soury is 5.83%, and the yield on a five-year Tremury secony 6.205. Acuming that the pure expectations theory is correct, what is the market's estimate of the three-year Treasury at two years from now? (Note: Do not round your intermediate calutations.) 7.109 6.53% 6.61 6.45