Check my work A recent edition of The Wall Street Journal reported interest rate

Question

Check my work A recent edition of The Wall Street Journal reported interest rates of 415 percent, 4.50 percent, 4.88 percent, and 5.15 percent for three-year, four-year, five-year, and six-year Treasury notes, respectively. According to the unbiased expectations theory of the term ucture of interest rates, what are the expected one-year rates during years 4, 5, and 6? (Do not round intermediate calculations. Round your answers to 2 decimal places.(e.g. 32.16) Expected One-Year Rates 013022 Year 4 Year 5 Year 6 eBook Reterences

Explanation / Answer

Year 4 = 1.045^4/1.0415^3 -1 = 5.56% Year 5 = 1.0488^5/1.045^4-1 = 6.41% Year 6 = 1.0515^6/1.0488^5-1 = 6.51%

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