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(c) Assume that interest rates for one-year securities are expected to be 1.215 percent today, 1.735 percent one year from now, and 2.185 percent two
(c) Assume that interest rates for one-year securities are expected to be 1.215 percent today, 1.735 percent one year from now, and 2.185 percent two years from now. Using only pure expectations theory, what are the current interest rates on two-year and three-year securities? (d) You need to choose between investing in a one-year municipal bond with a 3.5 percent yield and a one- year corporate bond with a 5.45 percent yield. If your marginal federal income tax rate is 21 percent and no other differences exist between these two securities, which would you invest in
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