Using the unbiased expectations theory

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Reference no: EM131953099

Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 0.5%, E(2r 1) = 1.5%, E(3r1) = 7.2%, E(4r1) = 7.55% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year maturity Treasury securities.

Reference no: EM131953099

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