One-year Treasury bills currently earn 2.50 percent. You expected that one year from now, 1-year Treasury bill rates will increase to 3.00 percent and that two years from now, 1-year Treasury bill rates will increase to 3.40 percent. If the unblased expectations theory is correct, what should the current rate be on 3-year Treasury securities? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Current 17 0%
One-year Treasury bills currently earn 2.50 percent. You expected that one year from now, 1-year Treasury bill rates will increase to 3.00 percent and that two years from now, 1-year Treasury bill rates will increase to 3.40 percent. If the unblased expectations theory is correct, what should the current rate be on 3-year Treasury securities? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Current 17 0%
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
Problem 1PS
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Transcribed Image Text:One-year Treasury bills currently earn 2.50 percent. You expected that one year from
now, 1-year Treasury bill rates will increase to 3.00 percent and that two years from now,
1-year Treasury bill rates will increase to 3.40 percent. If the unblased expectations
theory is correct, what should the current rate be on 3-year Treasury securities? (Do not
round Intermediate calculations. Round your answer to 2 decimal places.)
Current
rate
2.87
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