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Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2,3 , and 4
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2,3 , and 4 , respectively) are as follows: 1R1=6%,E(2r1)=7%,E(3r1)=7.50%,E(4r1)=7.85% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. Note: Round your percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34)
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