Following are the yields

Following are the yields

Following are the yields on selected Treasury securities: Maturity: 3 years: 2.3 yield….4 years: 2.5 yield….5 years: 2.4 yield. Using expectations theory, compute the one year interest rates in (a) year 4 and (b) year 5. That is, compute the rate that is expected to exist during year 4 only and the rate is expected during year 5 only.

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