Quantitative Problem: Foday, interest rotes on 1 -year T-bonds yeld 1.7\%, interest rates on 2-year T-bonds yleld 2.4%, and interest rates on 3 -year T-bonds yeld 3.7%. a. If the pure expectations theory is correct, what is the yield on 1-yeer T-bonds one your from now? Be sure to use e geometric average in your calculations, Do not round intermediate calculations, Round your answer to four decmal placns. b. If the pure expectations theory is correct, what is the yield on 2-year T-bonds one year from now? Be sure to use a geometric average in your calculations, Do not round intermediate celculations. Round your answer to four decimal places. c. If the pure expectations theory is correct, what is the yield on 1-year T-bonds two years from now? Be sure to use a goometric average in your calculations, Do not round intermediate caiculations. Round your answer to four decimal piaces. You can calculate the yield curve, given inflation and maturity-related risks. tooking at the yleld curve, you can use the information embedded in it to estimate the market's expectations regording future inflation, risk, and short-term interest rates. The theory states that the shape of the yield curve depends on investors' expectations about future interest rates. The theory assumes that bond traders establish bond prices and interest rates strictly on the basis of expectations for future interest rates ond that they are indifferent to maturity because they don't view long-term bonds as being riskier than short-term bonds. For example, assume that you had a 1 -year T-bond that yields 1.7% and a 2 -yeat T bond that yields 2.4%. From this information you could determine what the yleld on a 1-year T-bond one year from now would be. Investors with a 2 -year horizon could invest in the 2 -year T-bond or they could invest in a 1 -year T-bond today and a 1 -year T-bond one year from today. Both options should yletd the some resuit if the market is in equilibrium; otherwise, investors would buy and sell securties until the market was in equilibrium. Quantitative Problem: Today, interest rates on 1-year T-bonds yield 1.7%, interest rates on 2 -year T-bonds vield 2.4%, and interest rates on 3 -year T-bonds yield 3.7%6. Check My Work (1 remaining) You can calculate the yleld curve, given inflation and maturity-related risks. Looking at the yleld curve, you can use the information embedded in it to estimate the market's expectations regarding future infiotion, risk, and short-term interest rates. The theory states that the shape of the yield curve depends on investors expectations about future interest rates, The theory c ders estabish oond prices and interest rotes strictly on the basis of expectations for future interest rates and that they ore if because they don't view long-term bonds as being riskier than short-term bonds. for example, assume that you had a 1 -ye. bond that yields 2.4%. From this informahion you could determine what the yield on a 1 -year T-bond on 2.year horzon could invest in the 2-year T-bond or they coutd invest in a 1-year T-bend today and a 1-y optons should vield the same result if the market is in equlibrium; otherwise, investors would buy and equilibrium. Quantitative Problem: Today, interest rates on 1-year T-bonds yield 1.7\%, interest rates on 2-year T-bonds yeld 2.4%, and interest rates on 3 -year T-bonds yield 3.74. a. If the pure expectations theory is correct, what is the yleid on 1 -year T-bonds one year from now? De sure to use a geometric average in your