Please help me with both parts of the question. thanks Suppose the interest rate

Question

Please help me with both parts of the question. thanks

Suppose the interest rate on a 2-year Treasury security is 5.11% and the interest rate on a 5-year Treasury security is 6.20%. Assuming mat the pure expectations theory is correct, what is the market's estimate of the 3-year Treasury rate two years from now? 6 85% 7.01% 6.45% 6.53% 6.93% Now assume that the 2-year Treasury requires a 0.15% maturity risk premium and the 5-year Treasury rate has a 0 30% maturity risk premium The interest rate on a 2-year and 5-year Treasury securities is 5.11% and 6.20%, respectively. What is the market's estimate of the 3-year Treasury rate two years from now? 6.13% 6.37% 6.53% 6.29% 6.05%

Explanation / Answer

1.) 7.01 2.) 6.53

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