Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:
1R1 = 6%
E(2r1)=7%
E(3r1) = 7.5%
E(4r1) = 7.85%.
Using the unbiased expectations theory, calculate the current (long-term) rates for
one- [a],
two- [b],
three- [c],
and four-year-maturity Treasury securities [d].