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You observe that the interest rate on a 1 - year Treasury bond is 3 % and the interest rate on a 2 - year

You observe that the interest rate on a $1 -$ year Treasury bond is $3 %$ and the interest rate on a $2 -$ year Treasury bond is $7 % .$ Based on your reading of market commentaries, you infer that the expected interest rate one year from now is $7 % .$ What is the term premium?

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Question

You observe that the interest rate on a 1 - year Treasury bond is 3 % and the interest rate on a 2 - year

You observe that the interest rate on a 1-year Treasury bond is 3% and the interest rate on a 2-year Treasury bond is 7%. Based on your reading of market commentaries, you infer that the expected interest rate one year from now is 7%. What is the term premium?

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Auditing A Practical Approach

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You observe that the interest rate on a $1 -$ year Treasury bond is $3 %$ and the interest rate on a $2 -$ year Treasury bond is $7 % .$ Based on your reading of market commentaries, you infer that the expected interest rate one year from now is $7 % .$ What is the term premium?