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Problem 6-7 Expectations Theory One-year Treasury securities yield 3.5%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 6.45%. If the

Problem 6-7 Expectations Theory

One-year Treasury securities yield 3.5%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 6.45%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities? Calculate the yield using a geometric average. Round your answer to two decimal places.

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