Question

My crystal ball predicts the one year rates will be      4.180% today      4.320% in...

My crystal ball predicts the one year rates will be
     4.180% today
     4.320% in one years
     2.870% in two years
     5.300% in three years
     2.410% in four years


If the yield curve is formed solely from expectations then the two-year rate today must be:

the three-year rate today must be:

the four-year rate today must be:

and the five-year rate today must be:

Homework Answers

Answer #1

Formula sheet

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