Treasury yields-unbiased expectations theory

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Reference no: EM131950094

1. Celsius stock had year-end prices of $42, $37, $44, and $46 over the past four years, respectively. What is the arithmetic average rate of return?

A. 3.17 percent

B. 3.85 percent

C. 4.28 percent

D. 10.63 percent

E. 11.79 percent

2. Suppose we observe the following U.S. Treasury yields at one point in time: If the "unbiased expectations theory" is correct, what is the expected interest rate for the 1-year period starting one year from now?

a. 6.0%

b. 7.0%

c. 8.0%

d. 5.5%

Please show the process

Reference no: EM131950094

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