The yield on Treasury bills with different maturity period is as follows: Bond Yield 1-year Treasury bond 2-year Treasury bond 3-year Treasury bond 1.70% 2.05% 3.60% If the pure expectation theory holds true, what is the yield on 2-year Treasury bond one year from now? Calculate the yield on 2-year Treasury bond one year from now. (A) The yield on 2-year Treasury bond one year from now is 2.05%. (B) The yield on 2-year Treasury bond one year from now is 4.77%. (C) The yield on 2-year Treasury bond one year from now is 4.56%. (D) The yield on 2-year Treasury bond one year from now is 2.40%.
The yield on Treasury bills with different maturity period is as follows: Bond Yield 1-year Treasury bond 2-year Treasury bond 3-year Treasury bond 1.70% 2.05% 3.60% If the pure expectation theory holds true, what is the yield on 2-year Treasury bond one year from now? Calculate the yield on 2-year Treasury bond one year from now. (A) The yield on 2-year Treasury bond one year from now is 2.05%. (B) The yield on 2-year Treasury bond one year from now is 4.77%. (C) The yield on 2-year Treasury bond one year from now is 4.56%. (D) The yield on 2-year Treasury bond one year from now is 2.40%.
Chapter5: The Cost Of Money (interest Rates)
Section: Chapter Questions
Problem 7PROB
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Transcribed Image Text:The yield on Treasury bills with different maturity period is as follows:
Bond
Yield
1-year Treasury bond
2-year Treasury bond
3-year Treasury bond
1.70%
2.05%
3.60%
If the pure expectation theory holds true, what is the yield on 2-year Treasury bond one
year from now?
Calculate the yield on 2-year Treasury bond one year from now.
(A) The yield on 2-year Treasury bond one year from now is 2.05%.
(B) The yield on 2-year Treasury bond one year from now is 4.77%.
(C) The yield on 2-year Treasury bond one year from now is 4.56%.
(D) The yield on 2-year Treasury bond one year from now is 2.40%.
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