Assume that one-year T bill rates are expected to rise by 150 basis points per year over the next six years. Further assume that expectation theory prevails. Compute the required interest rate on a...

Extracted text: Assume that one-year T bill rates are expected to rise by 150 basis points per year over the next six years. Further assume that expectation theory prevails. Compute the required interest rate on a six-year T-bond when the current one-year interest rate is 2.5%. 5.5% a 6.25% b 7.75% c 8.25% d None of the above.