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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. If you want to
Suppose you are given the yields on the following Treasury securities. For simplicity, assume that there is no maturity risk premium. If you want to forecast the yield on a 1-year security in one year from now, you need to build the following equation: = . And the yield on 1-year security in one year would be If you want to forecast the yield on a 1-year security two years from now, you need to build the following equation: = . And the yield on 1-year security in two years would be If you want to forecast the yield on a 2-year security one year from now, you need to build the following equation: = . And the yield on 2-year security in one year would be If you want to forecast the yield on a 3-year security one year from now, you need to build the following equation: = . And the yield on 3-year security in one year would be Suppose the market offers the following Treasury securities: Make the necessary calculations and complete the following table using the data on the securities yields and the pure expectation theory. Suppose you are given the yields on the following Treasury securities. For simplicity, assume that there is no maturity risk premium. If you want to forecast the yield on a 1-year security in one year from now, you need to build the following equation: = . And the yield on 1-year security in one year would be If you want to forecast the yield on a 1-year security two years from now, you need to build the following equation: = . And the yield on 1-year security in two years would be If you want to forecast the yield on a 2-year security one year from now, you need to build the following equation: = . And the yield on 2-year security in one year would be If you want to forecast the yield on a 3-year security one year from now, you need to build the following equation: = . And the yield on 3-year security in one year would be Suppose the market offers the following Treasury securities: Make the necessary calculations and complete the following table using the data on the securities yields and the pure expectation theory
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