Question: TREASURY YIELDS (in %) Date 1MO 2MO 3MO 6MO 1 YR 2 YR 3Y 5YR 7YR 10 YR 20 YR 30 YR 3/19/2021 0.01 0.01

TREASURY YIELDS (in %)
Date 1MO 2MO 3MO 6MO 1 YR 2 YR 3Y 5YR 7YR 10 YR 20 YR 30 YR
3/19/2021 0.01 0.01 0.01 0.03 0.07 0.16 0.33 0.9 1.38 1.74 2.36 2.45
LIQUIDITY PREMIUMS
<= 1 yr 0.00%
2 yr 0.08%
3 yr 0.10%
5 yr 0.15%
7 yr 0.20%
10 yr 0.35%
20 yr 0.80%
30 yr 1.00%

Consider a recently published US Treasury yield curve and assume the liquidity premiums tabulated above.

ASSUMING that the liquidity premium theory of term structure applies, what is your forecast of the 7 year Treasury rate, 3 years from today?

Use geometric average returns and enter your answer in terms of percent and with 2 decimals places (e.g. if your answer is 5.32%, then enter 5.32 in the box).

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