Exam 1 – Version 2 – Finance 3320 – Summer 2010

a. If 2-year Treasury bond rates exceed 1-year rates, then the market must expect interest rates to rise. b. If both 2-year and 3-year Treasury rates are 7%, then 5-year rates must also be 7%. c. If 1-year rates are 6% and 2-year rates are 7%, then the market expects 1-year rates to be 6.5% in one year. d. ................
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