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GIVEN THE FOLLOWING INTEREST RATES TODAY MATURITY YIELD 1 YEAR...

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Finance

GIVEN THE FOLLOWING INTEREST RATES TODAY

MATURITY YIELD
1 YEAR 3.5%
2 YEARS 3.75%
3 YEARS 4.0%
4 YEARS 4.25%
5 YEARS 4.5%

AND IF THE PURE EXPECTATIONS THEORY HOLD, WHAT DOES THE MARKET EXPECT INTEREST RATE WILL BE ON

1. A ONE YEAR SECURITY, ONE YEAR FROM NOW?

2.TWO YEAR SECURITIES, THREE YEARS FROM NOW?

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