Interest rates on 4-year Treasury securities are currently 6.05%, while 6-year Treasury securities yield 7.5%. The...

 

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Interest rates on 4-year Treasury securities are currently 6.05%, while 6-year Treasury securities yield 7.5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. X Open spreadsheet If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round your intermediate calculations. Round your answer to two decimal places. % Expectations Theory 4-yr. Treasury security yield 6-yr. Treasury security yield Algebraic solution: Total return earned on 6-year securities. Total return earned on 4-year securities Yield on 2-yr. securities, 4 years from now Geometric solution: 1+ Total return earned on 6-year securities 1+ Total return earned on 4-year securities Yield on 2-yr. securities, 4 years from now 6.05% 7.50% Formulas #N/A #N/A #N/A #N/A #N/A #N/A Interest rates on 4-year Treasury securities are currently 6.05%, while 6-year Treasury securities yield 7.5%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. X Open spreadsheet If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round your intermediate calculations. Round your answer to two decimal places. % Expectations Theory 4-yr. Treasury security yield 6-yr. Treasury security yield Algebraic solution: Total return earned on 6-year securities. Total return earned on 4-year securities Yield on 2-yr. securities, 4 years from now Geometric solution: 1+ Total return earned on 6-year securities 1+ Total return earned on 4-year securities Yield on 2-yr. securities, 4 years from now 6.05% 7.50% Formulas #N/A #N/A #N/A #N/A #N/A #N/A

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It is given that 4 Year T security Yield 655 6 Year ... View the full answer