Assume that the interest rate on a 1-year treasury security, Ask an Expert

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Assume that the interest rate on a 1-year Treasury security is currently 6% and the rate on a 2-year Treasury security is 5%. Assume that the pure expectations theory is correct. To the closest whole percent, what is a reasonable forecast of the rate on 1-year Treasury securities next year? a. 4.0% b. 4.5% c. 5.0% d. 5.5% e. 6.0%

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