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 = 0.3%, E(2r 1) = 1.3%, E( 3r1) = 10.4 %, E(41) = 10.75% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your percentage answers to 3 decimal places. (e.g., 32.161)) One-year Two-year Three-year Four-year Current (Long-Term) Rates 0.300 % 0.799 % 5.006% %

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 = 0.3%, E(2r 1) = 1.3%, E( 3r1) = 10.4 %, E(41) = 10.75% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your percentage answers to 3 decimal places. (e.g., 32.161)) One-year Two-year Three-year Four-year Current (Long-Term) Rates 0.300 % 0.799 % 5.006% %

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter9: Forecasting Exchange Rates

Section: Chapter Questions

Problem 6BIC

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