One-year Treasury securities yield 2.05%. The market anticipates that 1 year from now, 1-year Treasury securities...

One-year Treasury securities yield 2.05%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 2.5%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.

%

Expert Solution

Yield for 2-year Treasury securities = [(1 + One-year Treasury securities yield) * (1 + 1-year Treasury securities yield, one year from now)]^(1/2) - 1

Yield for 2-year Treasury securities = [(1 + 0.0205) * (1 + 0.025)]^(1/2) - 1

Yield for 2-year Treasury securities = 1.0460125^(1/2) - 1

Yield for 2-year Treasury securities = 1.0227475251 - 1

Yield for 2-year Treasury securities = 0.0227475251

Yield for 2-year Treasury securities = 2.27475251%

Yield for 2-year Treasury securities = 2.27%

jeff jeffy answered 2 years ago

One-year Treasury securities yield 2.75%. The market anticipates that 1 year from now, 1-year Treasury securities...

One-year Treasury securities yield 2.75%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 3.6%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.

The yield on 1 year treasury securities is 7.25%, 2 year securities yield 7.3%, and 3...

The yield on 1 year treasury securities is 7.25%, 2 year securities yield 7.3%, and 3 year securities yield 7.5%. There is no maturity risk premium. Using expectations theory, forecast the yields on the following securities: (a) A 1-year security, 1 year from now (b) A 1-year security, 2 years from now (c) A 2-year security, 1 year from now

Pure Expectations Theory The yield on 1-year Treasury securities is 6%, 2-year securities yield 6.2%, 3-year...

Pure Expectations Theory The yield on 1-year Treasury securities is 6%, 2-year securities yield 6.2%, 3-year securities yield 6.3%, and 4-year securities yield 6.5%. There is no maturity risk premium. Using expectations theory and geometric averages, forecast the yields on the following securities: a. 1 year security, 1 year from now b. 1 year security, 2 years from now c. 2 year security, 1 year from now d. A 3 year security , 1 year from now

Interest rates on 6-year Treasury securities are currently 1.72%, while 9-year Treasury securities yield 1.83%. If...

Interest rates on 6-year Treasury securities are currently 1.72%, while 9-year Treasury securities yield 1.83%. If the pure expectations theory is correct, what does the market believe that 3-year Treasury securities will be yielding 6 years from now?

Interest rates on 4-year Treasury securities are currently 6.4%,while 6-year Treasury securities yield 7.55%. If...

Interest rates on 4-year Treasury securities are currently 6.4%, while 6-year Treasury securities yield 7.55%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.

Interest rates on 4-year Treasury securities are currently 7%, while 6-year Treasury securities yield 7.4%. If...

Interest rates on 4-year Treasury securities are currently 7%, while 6-year Treasury securities yield 7.4%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.

Interest rates on 4-year Treasury securities are currently 5.6%, while 6-year Treasury securities yield 7.15%. If...

Interest rates on 4-year Treasury securities are currently 5.6%, while 6-year Treasury securities yield 7.15%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.

Interest rates on 4-year Treasury securities are currently 6.3%, while 6-year Treasury securities yield 7.15%. If...

Interest rates on 4-year Treasury securities are currently 6.3%, while 6-year Treasury securities yield 7.15%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.,,,

One-year Treasury bills currently earn 2.95 percent. You expect that one year from now, 1-year Treasury...

One-year Treasury bills currently earn 2.95 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 3.15 percent and that two years from now, 1-year Treasury bill rates will increase to 3.65 percent. The liquidity premium on 2-year securities is 0.05 percent and on 3-year securities is 0.15 percent. If the liquidity premium theory is correct, what should the current rate be on 3-year Treasury securities? (Do not round intermediate calculations. Round your answer to...

"One-year Treasury bills currently earn 3.25%; You expect that one year from now, 1-year Treasury bill...

"One-year Treasury bills currently earn 3.25%; You expect that one year from now, 1-year Treasury bill rates will increase to 3.55% and that two years from now, one-year Treasury bill rates will increase to 4.15%; If the unbiased expectations theory is correct, what should the current rate be on three-year Treasury securities?" 3.56% 5.84% 3.42% 3.65% 3.93%

Question