Question: Given the following term structure and assuming the unbiased expectation theory holds, answer the following questions: Term Structure of Treasury Securities Year Yield % 1

  1. Given the following term structure and assuming the unbiased expectation theory holds, answer the following questions:

Term Structure of Treasury Securities

Year Yield %

1 3.7

2 3.2

3 3.1

4 3.0

5 2.9

  1. What is the 3-year rate 1 year from today?
  2. What is the 2-year rate 3 years from today?

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