Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 0.5%, E(2r 1) = 1.5%, E(3r₁) = 7.2%, E(471) = 7.55% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your percentage answers to 3 decimal places. (e.g., 32.161)) Answer is complete but not entirely correct. Current (Long-Term) Rates 0.500 % 0.990 % One-year Two-year Three-year Four-year 3.025% 4.863%
Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 0.5%, E(2r 1) = 1.5%, E(3r₁) = 7.2%, E(471) = 7.55% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your percentage answers to 3 decimal places. (e.g., 32.161)) Answer is complete but not entirely correct. Current (Long-Term) Rates 0.500 % 0.990 % One-year Two-year Three-year Four-year 3.025% 4.863%
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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![Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e.,
years 2, 3, and 4, respectively), are as follows:
1R1 = 0.5%, E(2r 1) = 1.5%, E(3r1) = 7.2%, E(471) = 7.55%
Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury
securities. (Round your percentage answers to 3 decimal places. (e.g., 32.161))
Answer is complete but not entirely correct.
Current (Long-Term)
One-year
Two-year
Three-year
Four-year
Rates
0.500 %
0.990
%
3.025
%
4.863%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe493b6aa-41c2-4ef7-9904-3631538936d6%2F8f300ef8-2e13-4cf4-8df9-0f109eca485f%2Fvs60nwm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e.,
years 2, 3, and 4, respectively), are as follows:
1R1 = 0.5%, E(2r 1) = 1.5%, E(3r1) = 7.2%, E(471) = 7.55%
Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury
securities. (Round your percentage answers to 3 decimal places. (e.g., 32.161))
Answer is complete but not entirely correct.
Current (Long-Term)
One-year
Two-year
Three-year
Four-year
Rates
0.500 %
0.990
%
3.025
%
4.863%
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