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The yields for Treasuries with differing maturities on a recent day are shown in the following table. a. Select the graph that represents the yield
The yields for Treasuries with differing maturities on a recent day are shown in the following table. a. Select the graph that represents the yield curve for this date. b. If the expectations hypothesis is true, approximately what rate of return do investors expect a 5-year Treasury note to pay 5 years from now? c. If the expectations hypothesis is true, approximately what rate of return do investors expect a 1-year Treasury security to pay starting 2 years from now? d. Is it possible that even though the yield curve slopes up in this problem, investors will not be expecting rising interest rates? Explain. B. Data Table Yield Curve of Treasury Securities 8- 6- (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Yield (%) Maturity 3 months 6 months 30 5 10 15 20 25 Time to Maturity (years) Yield 0.50 % 0.62 0.75 1.50 1.80 3.80 4.51 4.62 1 year 2 years 3 years 5 years 10 years 30 years D. Yield Curve of Treasury Securities 8 Q 6- Yield (%) Print Done 0 30 5 10 15 20 25 Time to Maturity (years) b. If the expectations hypothesis is true, the approximate rate of return investors expect a 5-year Treasury note to pay 5 years from now is %. (Round to two decimal places.)
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