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how do I solve question B? 0./ * / /-1) = 0,006 2. Suppose that the yield on Treasury securities with different maturities are listed

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how do I solve question B?

0./ * / /-1) = 0,006 2. Suppose that the yield on Treasury securities with different maturities are listed as below. Term Rate 1-year 5.4% 2-year 15.7% 3-year 5.8% 4-year 6.0% 5-year 6.1% 6-year 6.3% a. (5) If the pure expectation theory holds, what should be the yield on a 1-year security, 1 year from now? your 9,1=5.47. 4.2 15.7 l. (1+0.057)?1470.054) *(1+x) (1.057 1.054 X (1+x) 1.054 1.054 = 1.0600 = 1 + x 06= x x 67 b. (5) If the pure expectation theory holds, what should be the yield on a 3-year security, 3 year from now? (1+0.063)

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