Question: The current annualized yield on a 2-year STRIPS is 0.13% and the annualized yield on a 3-year STRIPS is 0.15% (WSJ for week ended 7/31/2020).

The current annualized yield on a 2-year STRIPS is 0.13% and the annualized yield on a 3-year STRIPS is 0.15% (WSJ for week ended 7/31/2020). According to the expectations theory of interest rates, what will be the annualized yield on a 1-year STRIPS two years from now? What would you expect to pay for this STRIPS with a $1,000 face value two year from now?

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