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Today, interest rates on 1-year T-bonds yield 1.2%, interest rates on 2 -year T-bonds yield 2.5%, and interest rates on 3 -year T-bonds yleld 3
Today, interest rates on 1-year T-bonds yield 1.2%, interest rates on 2 -year T-bonds yield 2.5%, and interest rates on 3 -year T-bonds yleld 3 , 4%%. a. If the pure expectations theory is correct, what is the yield on 1-year T-bonds 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 2-year T-bonds one year from now? be sure to use a geometric average in your calculations. De nat round intermediate calculations, Round your answer to four decimal places. c. If the pure expectations theory is correct, what is the yield on 1-year T-bonds two years from now? Be sure to use a gecmetric average in your caizulations. Do hot round intermediate calculations. Round your answer to four decimal places
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