Suppose 1-year Treasury bonds yield 2.80% while 2-year T-bonds yield 4.60%. Assuming the pure expectations theory is correct, and thus the maturity risk premium for T-bonds is zero, what is the yield on a 1-year T-bond expected to be one year from now?

Answer rating: 100% (QA)

According to the pure expectations theory the yield on a longterm bond is t... View the full answer