Suppose we observe the three-year Treasury security rate (1R3) to be 4.6 percent, the expected one-year...

Suppose we observe the three-year Treasury security rate (₁R₃) to be 4.6 percent, the expected one-year rate next year—E(₂r₁)—to be 5.2 percent, and the expected one-year rate the following year—E(₃r₁)—to be 6.2 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year Treasury security rate?(Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

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jeff jeffy answered 2 years ago

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