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Recall that on a one - year Treasury security the yield is 4 . 2 3 0 0 % and 5 . 0 7 6

Recall that on a one-year Treasury security the yield is 4.2300% and 5.0760% 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 0.35%. What is the markets estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.)
6.635%
4.4407%
5.2244%
5.9558%
Suppose the yield on a two-year Treasury security is 5.83%, and the yield on a five-year Treasury security is 6.20%. Assuming that the pure expectations theory is correct, what is the markets estimate of the three-year Treasury rate two years from now? (Note: Do not round your intermediate calculations.)
7.10%
6.45%
6.61%
6.69%

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