Explaining the unbiased expectations theory

Reference no: EM131795234

Question: Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 8%, E(2r1) = 9%, E(3r1) = 9.6%, E(4r1) = 9.95% Using the unbiased expectations theory, calculate the current (long-term) rates for 1-, 2-, 3-, and 4-year-maturity Treasury securities. (Round your answers to 2 decimal places.)

Reference no: EM131795234

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