Exercise 5.1 The price of a 6.375% 2-year Treasury note is 101.34. Note that from Example 5.2, 6-mth, 12-mth, and 18-mth spot rates are 5.12%, 5.47%, and 5.63%, respectively. What is the theoretical spot rate on a security with a single cash flow due in two years?

A) 2.83%

B) 3.19%

C.) 5.67%

D.) 6.38%