Question:Suppose that the yield on a two-year Treasury security is 5.84%,
and the yield on a...
Question
Suppose that the yield on a two-year Treasury security is 5.84%,
and the yield on a...
Suppose that the yield on a two-year Treasury security is 5.84%,
and the yield on a five-year Treasury security is 6.78%. Assuming
that the pure expectation theory is correct, what is the market's
estimate of the three-year Treasury rate two years from now? The
error margin will allow either arithmetic or geometric averaging on
this question.