Question
Hello, i have a question about the following question: 3. The current 1 year Treasury bill rate is 5.2 percent and the expected one year
Hello, i have a question about the following question:
3. The current 1 year Treasury bill rate is 5.2 percent and the expected one year rate 12 months from now is 5.8 percent, According to the unbiased expectation theory, what should be the current rate for a two year treasury security?
1R2= [(1 + .052)(1 + .058)]1/2 1 = 5.50% How you do you get the .0549957 or 5.50% in excel? I'm working in excel and can get to the following: (1+.052) x (1.058) = 1.113016. How do i get to the end of answer of 0.05499 or 5.5%? Do i divide or multiply the 1.113016 by something? Thanks for the help.
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