The expectations theory of yield curves is not very realistic because a key assumption is that investors are risk neutral. a key assumption is that...

5.

Suppose the interest rate on a 1-year Treasury Security in November of 1978 was 10%.  The interest rate on a two year security was 9.4%.  Assume the term premium was 0.5%.  According to the term premium theory, the expected interest rate on a one-year security in November of 1979 was ____ %