In: Finance
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:
1R1 = 3.26%,
E(2r1) = 4.70%,
E(3r1) = 5.20%,
E(4r1) = 6.70%
Using the unbiased expectations theory, calculate the current
(long-term) rates for 1-, 2-, 3-, and 4-year-maturity Treasury
securities. (Do not round intermediate calculations. Round
your answers to 2 decimal places.)
1
2
3
4