Question: Suppose we observe the three - year Treasury security rate ( 1 R 3 ) to be 5 . 3 percent, the expected one -

Suppose we observe the three-year Treasury security rate (1R3) to be 5.3 percent, the expected one-year rate next yearE(2r1)to be 5.8 percent, and the expected one-year rate the following yearE(3r1)to be 6.2 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year Treasury security rate?

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