The current one-year T-bill rate is. 40 percent and the expected one-year rate 12 months from now is. 80 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security

0.60%

Explanation:

The computation of the current rate for a two year treasury security is shown below:

= (1 + current one year t-bill rate) * (1 + expected one year rate) ^1 : 2 - 1

= (1 + 0.40%) * (1 + 0.80%) ^1 : 2 - 1

= (1.004 * 1.008) ^1 : 2 - 1

= 1.012032 ^1 : 2 - 1

= 1.0059980119 - 1

= 0.60%

We simply considered the information that is given in the question