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Interest rate on a 1-year Treasury bond (11) current rate on a 2-year Treasury bond (182) is 5.25 percent, and the current rate on a 3-year Treasury bond (183) is 6.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f1? (Round your answer to 2 decimal places.) Expected forward rate %

Interest rate on a 1-year Treasury bond (11) current rate on a 2-year Treasury bond (182) is 5.25 percent, and the current rate on a 3-year Treasury bond (183) is 6.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f1? (Round your answer to 2 decimal places.) Expected forward rate %

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Assume the current interest rate on a 1-year Treasury bond (181) is 4.50 percent, the current rate on a 2-year Treasury bond (182) is 5.25 percent, and the current rate on a 3-year Treasury bond (183) is 6.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f1? (Round your answer to 2 decimal places.) Expected forward rate %
Transcribed Image Text:Assume the current interest rate on a 1-year Treasury bond (181) is 4.50 percent, the current rate on a 2-year Treasury bond (182) is 5.25 percent, and the current rate on a 3-year Treasury bond (183) is 6.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f1? (Round your answer to 2 decimal places.) Expected forward rate %
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