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help asap pls 6. Pure expectations theory The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate
help asap pls
6. Pure expectations theory The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short-term interest rates. Based on the pure expectations theory, is the following statement true or false? The pure expectations theory assumes that investors do not consider long-term bonds to be riskler than short-term bonds. True False The yield on a one-year Treasury security is 5.1500%, and the two-year Treasury security has a 6.1800% 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.) 6.1371%7.2201%8.2309%9.1695% Recall that on a one-year Treasury security the yield is 5.1500% and 6.1800% on a two-year Treasury security. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.2%. What is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) 5.794%8.657%7.7708%6.8165% Suppose the yield on a two-year Treasury security is 5.83%, and the yleld on a five-year Treasury security is 6.20%. Assuming that the pure expectations theory is correct, what is the market's estimate of the three-year Treasury rate two years from now? (Note: Do not round your intermediate calculations.) 6.45% 7.10% 6.69% 6.61% Step by Step Solution
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