Question: The current 3-year spot rate is 4% and current 5-year spot rate is 5.5%. According to the pure expectation theory of the term structure of

The current 3-year spot rate is 4% and current 5-year spot rate is 5.5%. According to the pure expectation theory of the term structure of interest rates, what is the forward rate for 1-year securities beginning four years from today?

____

A) 7.79%

B) 8.23%

C) 10.14%

D) 9.58%

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