Forecast the interest rate on two-year treasuries

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Reference no: EM132816169

You observe the following yields on Treasury securities of various maturities:

Maturity Yield

1 year 4%

2 year 5

3 year 6

4 year 7

5 year 8

Using the expectations theory, forecast the interest rate on two-year Treasuries, 3 years from now. (That is, what will be the yield on 2-year Treasuries, issued in 3 years' time?)

Reference no: EM132816169

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