Question: Suppose 1-year Treasury bonds yield 4.00% while 2-year T-bonds yield 5.10%. Assuming the pure expectations theory is correct, and thus the maturity risk premium for

Suppose 1-year Treasury bonds yield 4.00% while 2-year T-bonds yield 5.10%.

Suppose 1-year Treasury bonds yield 4.00% while 2-year T-bonds yield 5.10%. 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? a. 5.90% b. 6.21% c. 6.52% d. 6.85% e. 7.19%

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