In looking at the current yield curve you see the following spot rates: one year 6.19%, two years 5.90%, and three years 5.71%. If you assume that the yield curve is best explained by the "pure expectations theory", what is the expected one-year rate two years from now?
A.	5.9%
B.	5.71%
C.	5.04%
D.	5.33%
Answer:D
In looking at the current yield curve you see the following spot rates: one year 6.19%, two years 5.90%, and three years 5.71%. If you assume that the yield curve is best explained by the "pure expectations theory", what is the expected one-year rate two years from now?
A.	5.9% B.	5.71% C.	5.04% D.	5.33%