Suppose 1-year Treasury bonds yield 2.20% while 2-year T-bonds yield 3.75%. Assuming the pure expectations...
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Suppose 1-year Treasury bonds yield 2.20% while 2-year T-bonds yield 3.75%. Assuming the pure expectations theory is correct, and thus the maturity risk premium for T-bonds is zero, what is the yield on a 1-year T-bond expected to be one year from now? Round the intermediate calculations to 4 decimal places and final answer to 2 decimal places
5.32%
4.73%
5.25%
4.38%
5.95%
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