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QUESTION
Interest rates on a 4 year treasury security are current 7 percent, while interest rates on 6 year security are currently 7.5 percent.
Interest rates on a 4 year treasury security are current 7 percent, while interest rates on 6 year security are currently 7.5 percent. If the pure expectations theory is correct, what does the market believe that 2 year securities will be yielding 4 years from now?
