Question: Ch 06: Assignment - Interest Rates The pure expectations theory assumes that investors do not consider long-term bonds to be riskier than short-term bonds. O

Ch 06: Assignment - Interest Rates The pure expectations theory assumes

Ch 06: Assignment - Interest Rates The pure expectations theory assumes that investors do not consider long-term bonds to be riskier than short-term bonds. O True O False The yield on a one-year Treasury security is 4.6900%, and the two-year Treasury security has a 6.3315% 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 9.1186% 0 7.9988% O 10.1585% O 6.799% Recall that on a one-year Treasury security the yield is 4.6900% and 6.3315% 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 0.3%. What is the market's estimate of the one-year Treasury rate one year from now? (Note: Do not round your intermediate calculations.) O 7.3902% 08.4248% O 9.3856% O 6.2817%

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