8. Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following thr

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8 Suppose That The Current One Year Rate One Year Spot Rate And Expected One Year T Bill Rates Over The Following Thr 1 (39.95 KiB) Viewed 14 times

8. Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: ₁R₁ = 6%, E(2₁) = 7%, E(3r₁) = 7.5%, E(4₁) = 7.85% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four- year-maturity Treasury securities. Plot the resulting yield curve. (LG 2-7) 1 11