Suppose the Interest Rate on a 1-Year T-Bond Is 5

question 65

Multiple Choice

Suppose the interest rate on a 1-year T-bond is 5.0% and that on a 2-year T-bond is 7.0%.Assuming the pure expectations theory is correct,what is the market's forecast for 1-year rates 1 year from now?

• A)7.36%
• B)7.75%
• C)8.16%
• D)8.59%
• E)9.04%

---

Definitions:

Queue Is Empty

This indicates that there are no items or elements waiting in line or in a sequence for processing.

Customer Service Counter

A dedicated space where customers can seek assistance, make inquiries, or avail services directly from a company's representatives.

Number of Channels

In a communication or distribution system, it refers to the pathways or mediums through which information, goods, or services are delivered.

Number of Phases

Refers to the stages or steps in a process or project.