Question: Problem 6-27 Forecasting Interest Rates (LG6-8) Assume the current interest rate on a 1-year Treasury bond (1R1) is 5.40 percent, the current rate on a

Problem 6-27 Forecasting Interest Rates (LG6-8) Assume the current interest rate

Problem 6-27 Forecasting Interest Rates (LG6-8) Assume the current interest rate on a 1-year Treasury bond (1R1) is 5.40 percent, the current rate on a 2-year Treasury bond (1R2) is 6.15 percent, and the current rate on a 3-year Treasury bond ( 1R3) is 7.40 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f1? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected forward rate 1.17%

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