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The interest rate on one-year Treasury bonds is 1.4 percent, the rate on two-year T-bonds is 1.6 percent, and the rate on three-year -bonds is
The interest rate on one-year Treasury bonds is 1.4 percent, the rate on two-year T-bonds is 1.6 percent, and the rate on three-year -bonds is 1.8 percent. a. Using the expectations theory, compute the expected one-year interest rate in the second year (Year 2 only). Round your answer to one decimal place. % b. Using the expectations theory, compute the expected one-year interest rate in the third year (Year 3 only). Round your answer to one decimal place. %
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