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- What is the best explanation of liquidity premium? What is suggested by an upward sloping yield according to segmented market theory? ExplainPlease give me answers I will give you like sure When the economy is expected to be very strong, and inflation and interest rates are expected to increase, this would result in a yield curve with a: Multiple Choice: positive slope negative slope flat shapeBased on economics forecast and analysis, one year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows 5.65%, 6.75% 6.85% 7.15% respectively and the liquidity premium from 2nd year to 4th year is 0.05%, 0.10%, 0.12%. Using the liquidity premium theory, plot the current yield curve. Make sure you label the axes on the graph and identify the four annual rates on the curve both on the axes and on the yield curve itself.
- What does a yield curve flattening mean for the expected future performance of the economy, optimistic or pessimistic?What are yield curves? Why are yield curves important? What does it mean when yield curves invert? Why are inverted yield curves usually a sign that an economic recession is on the horizon and should we be concerned about the economy going forward?Please answer each of the following questions in detail and provide in-text citations in support of your argument. Include examples whenever applicable. Make sure to provide examples for each of the questions below. 2. Describe the meaning of the yield curve. Verify how the shape of the yield curve provides predictions on the economy in future years. Please visit the US Governments’
- A large money center bank uses the US treasury yield curve to determine the appropriate level for its lending rates. To compensate for the costs of making a loan, the bank needs to charge 1.8% point more than the expected future interest rate on a Treasury security with the same maturity if it is to make a profit. The manager is considering a loan request from a customer seeking a one year loan that starts 2 years from today. If the two-year Treasury Strip rate is 4.1% and the three-year Treasury strip rate is 5.5%, at what minimum rate should the manager be willing to make the loan commitment?Enter your answer as a % to two decimal places. Assume the expectation theory of rates is valid and all liquidity premiums are zero.Can you answer this as well please and thank you. Using two of the three theories explain why the yield curve may be invertedWith a flat yield curve do you prefer to lend in the short term or long term A Short term since there is no incentive to lend in the long term B Long term since there is no incentive to lend in the short term C Neither since the yield curve is flat D Neither till new information comes out
- How have people have been using the Yield Curve in predicting the future economic conditions, in particular the possibility of a coming recession.Following a policy meeting on March 19, 2009, theFederal Reserve made an announcement that it wouldpurchase up to $300 billion of longer-term Treasurysecurities over the following six months. What effectmight this policy have on the yield curve?: Show graphically the effect of a rise in expected inflation on interest rates in the bond market.