The yield on a one year treasury securities is 6%, 2-year

Subject: Business    / Finance
Question

The yield on a one year treasury securities is 6%, 2-year securities yield 6.2%, 3 year securities yield 6.3%, and 4 year securities yield 6.5%. There is no maturity risk premium. Using expectations theory and geometric averages, forecast the yields on the following securities:

a. A 1-year security, 1 year from now

b. A 1-year security, 2 years from now

c. A 2-year security, 1 year from now

d. A 3-year security, 1 year from now