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Unformatted text preview: 7.0 Assume that the pure expectations hypothesis holds and that the market expects that the one-year rate will be 7.2% four years from today. What is the four-year rate today? A) 6.50% B) 5.20% C) 6.80% D) 6.20% E) 6.95% Points Earned: 0.0/5.0 Correct Answer(s): E 13. Currently, 3-year Treasury securities yield 5.4%, 7-year Treasury securities yield 5.8%, and 10-year Treasury securities yield 6.2%. If the expectations theory is correct, what does the market expect will be the yield on 3-year Treasury securities seven years from today? A) 6.54% B) 5.80% C) 7.14% D) 5.68% E) 4.58% Points Earned: 0.0/5.0 Correct Answer(s): C...
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