The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used...
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The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short- term interest rates. Based on the pure expectations theory, is the following statement true or false? A certificate of deposit (CD) for two years will have the same yield as a CD for one year followed by an investment in another one-year CD after one year. O True False The yield on a one-year Treasury security is 4.4600 %, and the two-year Treasury security has a 6.0210% yield. Assuming that the pure expectations theory is correct, what is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) O 7.6053% O 8.67% 6.4645% O 9.6587% Recall that on a one-year Treasury security the yield is 4.4600 % and 6.0210 % on a two-year Treasury security. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.25%. What is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) 7.0984% O 6.0336% 9.015% O 8.0922% Suppose the yield on a two-year Treasury security is 5.83%, and the yield on a five-year Treasury security is 6.20%. Assuming that the pure expectations theory is correct, what is the market's estimate of the three-year Treasury rate two years from now? (Note: Do not round your intermediate calculations.) O 6.61% O 6.45% O 6.53% O 5.46% The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short- term interest rates. Based on the pure expectations theory, is the following statement true or false? A certificate of deposit (CD) for two years will have the same yield as a CD for one year followed by an investment in another one-year CD after one year. O True False The yield on a one-year Treasury security is 4.4600 %, and the two-year Treasury security has a 6.0210% yield. Assuming that the pure expectations theory is correct, what is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) O 7.6053% O 8.67% 6.4645% O 9.6587% Recall that on a one-year Treasury security the yield is 4.4600 % and 6.0210 % on a two-year Treasury security. Suppose the one-year security does not have a maturity risk premium, but the two-year security does and it is 0.25%. What is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) 7.0984% O 6.0336% 9.015% O 8.0922% Suppose the yield on a two-year Treasury security is 5.83%, and the yield on a five-year Treasury security is 6.20%. Assuming that the pure expectations theory is correct, what is the market's estimate of the three-year Treasury rate two years from now? (Note: Do not round your intermediate calculations.) O 6.61% O 6.45% O 6.53% O 5.46%
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