Economics Help?

Question

The following quote appeared in a recent Wall Street Journal article:
Over the years Federal Reserve officials have grappled with what they call the ‘mirror’ problem. When central bankers look at interest rates set in financial markets are they looking at investors’ independent judgments about the economy or are they simply seeing investors’ interpretation of the Fed’s own words? Today the Fed is clearly not looking in a mirror. Officials repeatedly say they’re worried about inflation, then watch the markets ignore their admonitions and price in Fed interest rate cuts.
Note: Currently, yields to maturity in markets for US Treasuries range from 5.06% on the 6 month T-bill, to 4.85 % on securities maturing in 1 year, 4.72% on securities maturing in 1.5 years, 4.63% on 2 year securities, 4.53% on securities maturing in 3 years, and 4.48% on 5 year Treasury notes.)

Based on these rates, what is the implied 6 month T-Bill rate 1 year from now?

Answer 1

4.47%, and no need for diarrhea...

You use the rates for 1 year maturity and 1.5 years maturity from today (4.85% and 4.72% respectively)

Holding a 1 year T-Bill from today and then a 6 month T-Bill one year from now should, in a market equilibrium, yield the same as holding a 1.5 year T-Bill from today.

Hence
(1+0.0485)*(1+x/2) = (1+0.0472)*(1+0.0472/2)
x=0.04466 --> 4.47%

Answer 2

I don't intend to be mean like all those other guys, but your question is so difficult to digest I've got diarrhea just by reading it, wish I could help you, but I got to run for the toilette.