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Today, interest rates on 1 - year T - bonds yield 1 . 2 % , interest rates on 2 - year T - bonds
Today, interest rates on year Tbonds yield interest rates on year Tbonds yield and interest rates on year Tbonds yield
a If the pure expectations theory is correct, what is the yield on year Tbonds one year from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places.
b If the pure expectations theory is correct, what is the yield on year Tbonds one year from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places. c If the pure expectations theory is correct, what is the yield on year Tbonds two years from now? Be sure to use a geometric average in your calculations. Do not round intermediate calculations. Round your answer to four decimal places.
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