You observe the following yield curve for Treasury securities:
Maturity Yield
1 Year 4.6%
2 Years 4.8
3 Years 4.9
4 Years 4.8
5 Years 5.2
Assume that the expectations theory holds. What does the market expect the interest rate on 1- year securities to be four years from today?
a. 4.8%
b. 5.2%
c. 5.6%
d. 6.8%
e. 35.4%

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