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Posted on Jul 26, 2024

You observe the following yield curve for Treasury securities: Maturity Yield 1 Year 2.80% 2 Years 3.90% 3 Years 4.80% 4 Years 4.80% 5 Years

You observe the following yield curve for Treasury securities:

Maturity Yield

1 Year 2.80%

2 Years 3.90%

3 Years 4.80%

4 Years 4.80%

5 Years 5.60%

Assume that the pure expectations hypothesis holds. What does the market expect will be the yield on 4-year securities, 1 year from today?

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