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Following are maturity and yield of a given data set (10 marks) Maturity Yield 1 year 6.0% 2 years 6.2% 3 years 6.4% 4 years

Following are maturity and yield of a given data set (10 marks) Maturity Yield 1 year 6.0% 2 years 6.2% 3 years 6.4% 4 years 6.5% 5 years 6.5% If PEH holds, what does the market expect will be the interest rate? a. One-year securities, one year from now? b. Three-year securities, two years from now? c. Two-year securities, two year from now?

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