Question: Given the Term Structure below: 1 year = 3.7% 2 years = 4.9% 3 years = 5.3% 4 years = 6.8% 5 years = 7.8%

Given the Term Structure below:

1 year = 3.7%

2 years = 4.9%

3 years = 5.3%

4 years = 6.8%

5 years = 7.8%

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

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