Iowa State University

One-year Treasury securities yield 4.78%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 5.29%. If the pure expectation theory is correct, what should be the yield today for 2-year Treasury securities? (1 + x)2 = (1 + .0478) * (1 + .0529) (1 + x)2 = 1.1032. Take the square root of both sides to get ride of the 2 ................
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