Question: Given the Term Structure below: 1 year = 3.2% 2 years = 4.2% 3 years = 5.6% 4 years = 6.2% 5 years = 7.7%

Given the Term Structure below:

1 year = 3.2%

2 years = 4.2%

3 years = 5.6%

4 years = 6.2%

5 years = 7.7%

Based on the expectations hypothesis, what does the market expect the 1 year rate in 4 year to be?

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