Looking in today’s newspaper, you observe the following yield curve information:
Maturity.........Yield
1-Year.......... 4.00%
2-Year.......... 4.50%
3-Year.......... 5.10%
4-Year.......... ????%
5-Year.......... 5.50%
Assume the pure expectation hypothesis holds and the market expects that 1-year rate will be 6.1% 4 years from today (4rt1=6.1%). What is the 4-year rate today (rt4)? Show every step of your calculations.