Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / one-year treasury bills currently earn 3
one-year treasury bills currently earn 3.45 percent. you expect that one year from now, one-year treasury bill rates will increase to 3.95 percent. if the unbiased expectations theory is correct,what should the current rate be on two year treasury securities?
Treasury bill earn= 3.45%
Treasury bill increase= 3.95%
Current rate= r= ?
therefore,
=> (1+3.45%)* (1+ 3.95%) = (1+r)2
1.075363 = (1 + r)2
1.036997= 1 + r
r = ( 1.036997 -1)
= 0.036997 or 3.70%
