One-year Treasury bills currently earn 4.85 percent

jagguarpaw January 13, 2017 0 Comments

Question: One-year Treasury bills currently earn 4.85 percent…

One-year Treasury bills currently earn 4.85 percent. You expect that one year from now, one-year Treasury bill rates will increase to 5.00 percent. If the unbiased expectations theory is correct, what should the current rate be on two-year Treasury securities?