Question: Suppose that the yield on a two year treasury security is 5.84%, and the yield on a five year Treasury security is 6.58%. Assuming that
Suppose that the yield on a two year treasury security is 5.84%, and the yield on a five year Treasury security is 6.58%. Assuming that the pure expectation theory is correct, what is the markets estimate of the three year treasury rate two years from now?
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