Reference no: EM133116479
Recall the expectations theory asserts that the current implied forward rates for 1 year ahead---that is, the forward rates from year 1 to future dates---are good estimates of next year's spot rates.
Given the current yearly spot rate curve
s = (5.3%, 5.6%, 5.9%, 6.2%, 6.5%, 6.8%)
Find a good estimate for the spot rate curve for next year, assuming the expectations theory is true.
Group of answer choices
(5.90%, 6.20%, 6.50%, 6.80%, 7.10%)
(5.60%, 5.90%, 6.07%, 6.25%, 6.32%)
(4.30%, , 4.60%, 4.80%, 5.00%, 5.10%)
(6.60%, 6.90%, 7.07%, 7.25%, 7.32%)
(5.30%, 5.60%, 5.80%, 6.00%, 6.10%)
(5.00%, 5.30%, , 5.60%, 5.80%, 6.00%)
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