Ask Question
29 October, 06:46

Interest rates on 4-year Treasury securities are currently 5.6%, while 6-year Treasury securities yield 7.45%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now

+3
Answers (1)
  1. 29 October, 09:01
    0
    2 year yield 4 years from now = [ (1 + 0.056) ⁶ / (1 + 0.0745) ⁴]^1/2 - 1

    2 year yield 4 years from now = [ 1.3867 / 1.3329]^1/2 - 1

    2 year yield 4 years from now = 1.019 - 1

    2 year yield 4 years from now = 1.99%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Interest rates on 4-year Treasury securities are currently 5.6%, while 6-year Treasury securities yield 7.45%. If the pure expectations ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers