options for part b:

less than

greater than

equal to

r4=4.5%, and r5=6.12 a. What will be the 1 -year spot interest rate in three years if the expectations theory of term structure is correct? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimol place.) b. If investing in long-term bonds carries additional risks, then how would the risk equivalent of a 1 -year spo rate in three years relate to your answer to part (a)? Less than