Question: Problem 6-8 Expectations Theory Interest rates on 4-year Treasury securities are currently 6.6%, while 6-year Treasury securities yield 7.3%. If the pure expectations theory is

Problem 6-8 Expectations Theory

Interest rates on 4-year Treasury securities are currently 6.6%, while 6-year Treasury securities yield 7.3%. 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. Round your answer to two decimal places.

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