One-year Treasury securities yield 1.00 %. The market anticipates that 1 year from now, 1-year Treasury ecurities will yield 2.00%. If the pure expectations theory is correct, what is the yield today for 2-year reasury securities? Question 2 options: 2.50% 0.50% 3.00% 1.50%

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Q: What is the EAR?

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Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.