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5. Pure expectations theory The pure expectations theory, or the expectations hypothesis, asserts that long-term interest rates can be used to estimate future short-term interest Based on the pure expectations theory, is the following statement true or false? The purs expectations theory assumes that a one-year bond purchased today will have the same return as a one-year bond purchased te vears from now. The yield on a one-year Treasury security is 5.6100%, and the two-year Treasury security has a 6.7320% 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.) 8.9671% D 9.99970. 06.6859 Recall that on a one-veer Treasury security the vield is 5.6100% and 6.73209, on a two wear Treasury security. Suppose the one-year security does not have a maturity risk premium, but the 20-year security does and it is 0.255. What is the market's estimate of the one-year Treasury rate one vear from now? (Note: Do not round your intermediate calculations.) Suppose the vield on a two-vear 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 the years from now? (Note: Do not round your Intermediate calculations.) O 5.46% 6.699 -1003