You observe the following yield 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 3 years, starting 2 year from today?

Select one:

a.6.40%

b.7.30%

c.6.30%

d.6.97%

e.6.75%