What should the yield be on one year t-bond one year

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Reference no: EM131510169

Suppose 1-year Treasury bonds yield 3.0% while 2-year T-bonds yield 4.5%. Assuming the pure expectations theory is correct and thus the maturity risk premium is zero, what should the yield be on a 1-year T-bond one year from now?

a) 5.91% b) 6.02% c) 6.13% d) 6.24% e) 6.35%

Reference no: EM131510169

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