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.

True

False

The yield on a one-year Treasury security is 4.2300%, and the two-year Treasury security has a 6.3450% yield. Assuming that the pure expectations theory is correct, what is the markets estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.)

7.2275%

8.5029%

9.6933%

10.7987%

Recall that on a one-year Treasury security the yield is 4.2300% and 6.3450% 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 markets estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.)

6.7944%

9.1125%

7.9934%

10.1516%

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 markets estimate of the three-year Treasury rate two years from now? (Note: Do not round your intermediate calculations.)

6.53%

6.69%

6.45%

7.10%