Question: Suppose the annualized yield on a one year security today is 0.06. The markets expect the annualized yield on a one-year security to be 0.07

Suppose the annualized yield on a one year security today is 0.06. The markets expect the annualized yield on a one-year security to be 0.07 one year from today, 0.05 two years from today, and 0.03 in three years.

using pure expectations theory, calculate the annualized yield on a three year security today.

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