Question
The Wall Street Journal (WSJ) reports 1-year Treasury securities are yielding r T1 = 3.23% and you anticipate that one year from now, 1-year Treasury
The Wall Street Journal (WSJ) reports 1-year Treasury securities are yielding rT1 = 3.23% and you anticipate that one year from now, 1-year Treasury securities will be yielding 1rT1 = 3.78%. Assume that the pure expectations theory is valid. Determine the yield today for 2-year Treasury securities (find rT2). Show your work.
WSJ also reports that interest rates on 4-year Treasuries are currently rT4 = 4.82% and 6-year Treasuries are rT6 = 4.15%. Again assume that the pure expectations theory is valid. Determine what 2-year Treasuries will be yielding 4 years from now (find 4rT2). Show your work.
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