One-Year Treasury Bills Currently Earn 2

question 61

Multiple Choice

One-year Treasury bills currently earn 2.55 percent. You expect that one year from now, one-year Treasury bill rates will increase to 2.85 percent and that two years from now, one-year Treasury bill rates will increase to 3.15 percent. If the unbiased expectations theory is correct, what should the current rate be on 3-year Treasury securities?

• A) 2.55 percent
• B) 2.85 percent
• C) 2.93 percent
• D) 3.15 percent

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