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Suppose you are given the yields on the following Treasury securities . For simplicity, assume that there is no maturity risk premium. Security Yield (
Suppose you are given the yields on the following Treasury securities For simplicity, assume that there is no maturity risk premium.
Security
Yield
Percent
year
year
year
year
If you want to forecast the yield on a year security in one year from now, you need to build the following equation:
And the yield on year security in one year would be
If you want to forecast the yield on a year security two years from now, you need to build the following equation:
And the yield on year security in two years would be
If you want to forecast the yield on a year security one year from now, you need to build the following equation:
And the yield on year security in one year would be
If you want to forecast the yield on a year security one year from now, you need to build the following equation:
And the yield on year security in one year would be
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