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You observe the following curve for Treasury securities: Maturity Yield 1 year 5.5% 2 years 5.8% 3 years 6.0% 4 years 6.3% 5 years 6.5%
You observe the following curve for Treasury securities:
Maturity | Yield |
1 year | 5.5% |
2 years | 5.8% |
3 years | 6.0% |
4 years | 6.3% |
5 years | 6.5% |
Assume that the pure expectations hypothesis holds. What is the predicted interest cost if you plan to borrow for 2 years, starting 3 years from today?
Select one:
a. 6.40%
b. 6.75%
c. 7.30%
d. 7.25%
e. 6.30%
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