Question: Suppose 2-year Treasury bonds yield 5.5%, while 1-year bonds yield 6%. r* is 1.5%, and the maturity risk premium is zero. Using the expectations

Suppose 2-year Treasury bonds yield 5.5%, while 1-year bonds yield 6%. r*

Suppose 2-year Treasury bonds yield 5.5%, while 1-year bonds yield 6%. r* is 1.5%, and the maturity risk premium is zero. Using the expectations theory, what is the yield on a 1- year bond, one year from now? Calculate with at least 4 decimal places on your calculator and round your final answer to two decimal places. For example, if your answer is $345.6671 enter as 345.67 and if your answer is .05718 or 5.718% enter as 5.72 in the answer box provided.

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