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What is the expected two-year rate in three years

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Reference no: EM132523308

The table below is the YTM of U.S. Treasuries with different maturities on April 1, 2020.

1 yr.              2 yr.          3 yr.          5 yr.         7 yr.

0.16%         0.23%     0.28%     0.37%      0.51%

Question a. What is the expected two-year rate in three years according to the Pure Expectations Theory?

Question b. What is an inverted yield curve? Give one reason that may cause the yield curve to invert

Reference no: EM132523308

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