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The current rates on Treasury securities are as follows: 1R1 = 4.33%, 1R2 = 5.25%, 1R3 = 5.55%, and 1R4 = 6.01%. If the unbiased
The current rates on Treasury securities are as follows: 1R1 = 4.33%, 1R2 = 5.25%, 1R3 = 5.55%, and 1R4 = 6.01%. If the unbiased expectations theory holds,
a) what does the market expect the one-year Treasury rate to be three years from now? Answer: 7.4%
b) what does the market expect the one-year Treasury rate to be during year 3? Answer: 6.15%
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