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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 (le, years 2, 3, and
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (le, years 2, 3, and 4, respectively) are as follows 11 -7% (21) = 8%, E3/1) - 8.60%, E(41) -8.95% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your answers to 2 decimal places.) Current (Long-term) Rates Years 1 2 3 4 % % < Prev 2 of 9 Next >
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