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Questions 5 & 6 please 4. Suppose that the current one-year rate and expected one-year T-bill rates over the following three years (i.e., year 2,

Questions 5 & 6 please image text in transcribed
4. Suppose that the current one-year rate and expected one-year T-bill rates over the following three years (i.e., year 2, 3, and 4, respectively) are as follows: R1 = 5%, E(211)=6%, E(311)= 7%, Ear)=7.5% Using the unbiased expectations theory, calculate the current rates for three-year and four-year Treasury securities. (3 points) 5. A recent edition of the Wall Street Journal reported interest rates of 2.5%, 2.80%, 3.0%, and 3.25% for the three-year, four-year, five-year, and six-year Treasury note yields, respectively, According to the unbiased expectation theory of the term icture of interest rates, what are the expected one-year rate during years 4 and 5? (3 points) 6. Based on economists' forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 -5.8%, E(201) 6.4%, L2=0.1%, E(3r)-6.9%, L3=0.2%, E(41)=7.5%, L4-0.3% Using the liquidity premium hypothesis, calculate the current rate for the three-year Treasury security. (3 points)

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