One-year Treasury securities yield 2.9%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 6.9%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities? Calculate the yield using a geometric average. Do not round your intermediate calculations. Round your answer to two decimal places.
Interest rates on 4-year Treasury securities are currently 6.45%, while 6-year Treasury securities yield 7.5%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round your intermediate calculations. Round your answer to two decimal places.
The real risk-free rate is 2.9%. Inflation is expected to be 3% this year, 3.9% next year, and 3.25% thereafter. The maturity risk premium is estimated to be 0.05 × (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Do not round your intermediate calculations. Round your answer to two decimal places.
Due to a recession, expected inflation this year is only 2.5%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 2.5%. Assume that the expectations theory holds and the real risk-free rate (r*) is 3.25%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 3.25%, what inflation rate is expected after Year 1? Round your answer to two decimal places.