Video Excel Online Structured Activity: Expectations Theory Interest rates on 4 year Treasury securities are currently 6.85%, while 6 year Treasury securities yield 7.25%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet If the pure expectations theory is correct, what does the market beleve that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round your intermediate calculations, Round your answer to two decimal places. 7.46 Check My Work Reset Problem Undo Clipboard Font Alignment B7 B D E F Expectations Theory 1 2 6.85% 7.25% 4 3 4-yr. Treasury security yield 6-yr. Treasury security yield 5 Algebraic solution: Total return earned on 6-year securities Total return earned on 4-year securities Yield on 2-yr. securities, 4 years from now 6 7 8 9 Formulas #N/A #N/A #N/A 10 11 Geometric solution: 12 1 + Total return earned on 6-year securities 13 1 + Total return earned on 4-year securities 14 Yield on 2-yr. securities, 4 years from now #N/A #N/A #N/A 15