Forecasting Interest Rates a Recent Edition of the Wall Street

question 60

Multiple Choice

Forecasting Interest Rates A recent edition of The Wall Street Journal reported interest rates of 3.10 percent, 3.50 percent, 3.75 percent, and 3.95 percent for three-year, four-year, five-year, and six-year Treasury security yields, respectively, According to the unbiased expectation theory of the term structure of interest rates, what are the expected one-year rates for year 6?

• A) 3.575%
• B) 3.95%
• C) 4.96%
• D) 5.33%

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