- The current rate on a 1-year Treasury Bill is 2.05% (note: I just made up that value) and the rate on a 2-year Treasury Note is 2.45% (again, I just made up that number). According to the Pure Expectations Theory (PET), what is the expected rate on a 1-year Treasury Bill one year from now?
(Bonus: What added information would you need to calculate the expected rate on a 2-year Treasury Note one year from now?)
2.(YTM) The current price of a 10-year U.S. Treasury Note with eight years to maturity is $1,080. Assuming the usual maturity value of $1,000 and semi-annual coupon payments, what is the Yield to Maturity (YTM) for this bond? assume the coupon rate for the bond in problem is 8.00%
