Question: Now its time for you to practice what youve learned. Suppose the market offers the following Treasury securities: Treasury security Yield (Percent) 1year 4.90 2year

Now its time for you to practice what youve learned.

Suppose the market offers the following Treasury securities:

Treasury security

Yield

(Percent)
1year 4.90
2year 6.00
3year 7.30
4year 8.60
5year 9.80
6year 11.50

Make the necessary calculations and complete the following table using the data on the securities yields and the pure expectation theory.

Investment Yield
1year Treasury security, 1 year from now
2year Treasury security, 2 years from now
3year Treasury security, 1 year from now
4year Treasury security, 2 years from now

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