One-year Treasury bills currently earn 3.75 percent. You expect that one year from now, one-year Treasury bill rates will increase to 4.15 percent. If the unbiased expectations theory is correct, what should the current rate be on two-year Treasury securities?
A) 4.25%
B) 3.85%
C) 3.95%
D) 4.35%
Correct Answer:
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