Question: Suppose 1-year Treasury bonds yield 4.00% while 2-year T-bonds yield 4.90%. 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 4.90%. 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? Round the intermediate calculations to 4 decimal places and final answer to 2 decimal places.

Group of answer choices

5.11%

4.65%

6.91%

5.81%

5.05%

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