Question: Using expectations theory: You observe that there is a one - year Treasury bond with a yield of 6 . 0 % . You also
Using expectations theory:
You observe that there is a oneyear Treasury bond with a yield of You also assume that rates will increase and that the oneyear bond will increase by each year. For example, you expect the oneyear bond in year will be and in year
With that information, what do you expect the year interest rate to be in terms?
What rate in s do you expect a year bond to have?
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