1) The current one-year Treasury bill rate is 5.5 percent, and the expected one-year rate 12 months from now is 4.2 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security?

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1) The current one-year Treasury bill rate is 5.5 percent, and the expected one-year rate 12
months from now is 4.2 percent. According to the unbiased expectations theory, what
should be the current rate for a two-year Treasury security?
2) Explain five of the risks faced by financial institutions.
3) Explain five of the functions that Federal Reserve Banks perform
Transcribed Image Text:QUESTIONS 1) The current one-year Treasury bill rate is 5.5 percent, and the expected one-year rate 12 months from now is 4.2 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security? 2) Explain five of the risks faced by financial institutions. 3) Explain five of the functions that Federal Reserve Banks perform
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