Expectations theory of term structure of interest rates

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Reference no: EM131913851

E-Ticket System has just made a big announcement: The firm will split its stock 7-for-one.

Assume the current interest rate on a 1-year Treasury bond (1R1) is 5.90 percent, the current rate on a 2-year Treasury bond (1R2) is 6.65 percent, and the current rate on a 3-year Treasury bond (1R3) is 7.90 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f1?

Reference no: EM131913851

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