A One-Year Treasury Security Currently Returns a 4

question 3

Multiple Choice

A one-year Treasury security currently returns a 4.50% yield to maturity.A two-year Treasury security offers a 4.80% yield to maturity.If the expectations hypothesis is true,what is the expected return on a one-year security next year?

• A) 4.80%
• B) 4.90%
• C) 5.00%
• D) 5.10%

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Definitions:

Standard Hours Allowed

The predetermined amount of time expected to be required to produce a certain quantity of output under normal working conditions.

Actual Output

The real quantity of goods or services produced by a business during a specific period, as opposed to planned or potential output.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost of materials that were expected to be used.

February

The second month of the year in the Gregorian calendar, known for having 28 days in common years and 29 days in leap years.