Multiple Choice
Suppose 1-year Treasury bonds yield 4.00% while 2-year T-bonds yield 5.10%.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?
A) 5.90%
B) 6.21%
C) 6.52%
D) 6.85%
E) 7.19%
Correct Answer:
Verified
Correct Answer:
Verified
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