Question

Suppose that the interest rate on a one-year Treasury bill is currently 3% and that investors expect that the interest ratos on one-year Treasury bills over the next three years will be 4%, 5%, and 3%. Use the expectations theory to calculate the current interest rates on two-year, three-year, and four-year Treasury notes The current interest rate on two-year Treasury notes is % (Round your response to two decimal places.) The current interest rate on three-year Treasury notes is % (Round your response to two decimal places.) The current interest rate on four-year Treasury notes is 1% (Round your response to two decimal places) in anch of the answer boxes

Answer 1

(1.01/2) Two yeays tessway intey set yete + 0. (0.0 +1) 0.03 +1) 1رة +1) (1.54) زده .۱ ) مرغ + 1) (1+ 1 .01/2 372 371 7.0 ؟ + ) = (.03778 792 - / 0.03998172 در 3.9 : Current enterest Gate on 3rd year 0 6 (2005) (۱۰۰۶ ) 1.032) - ره ) هر +) 6077 195 o. - (ع )) (.(2444 ره (.03758677- - 0.03954647 م م 3.15 - ال ان ) (1+ 4 = (1053) (1.54) (155) (۱۰۰) |.1585628 (t) = 100344 ،695 0.037 t 695 9. 10 . ca ده