a. like? b. $ $ $ $ $ $ $ 4 Turkey Yield Curve-6 Jun 2023 Turkey Gond GY Residual Maturity 1M ago AY BY M III T 10Y Turkey (8 Jun 2023) OM ago Are the three yield curves depicted here "normal" yield curves? What does the normal yield curve look. What does the shape of the current Turkish yield curve tell you about the expectations of market
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- The demand D (in billions of £) for a bond with coupon rate 5% and face value FV = 1000, andtwo years to maturity as a function of its price P is D = 4000 − 2P. The supply in (billions of£) as a function of the price of the bond is S = 2P + 400. b) Suppose that the yield to maturity of the bond is i = 0.05. What is the quantitydemanded/supplied at this interest rate? What happens to the demand/supply of the bond asthe interest rate increases? Explain why. c) What is the equilibrium interest rate?The demand D (in billions of £) for a bond with coupon rate 5% and face value FV = 1000, andtwo years to maturity as a function of its price P is D = 4000 − 2P. The supply in (billions of£) as a function of the price of the bond is S = 2P + 400. b) Suppose that the yield to maturity of the bond is i = 0.05. What is the quantitydemanded/supplied at this interest rate? What happens to the demand/supply of the bond asthe interest rate increases? Explain why. c) What is the equilibrium interest rate? d) Suppose that the bond trades at premium. Is there excess demand or supply? Explain.e) There is a business cycle expansion, so both supply and demand shifts. After the shift, thenew demand curve is given by: D = 4000 + X − 2P, whereas the new supply curve is S =2P + 200. For which values of X will the interest increase/decrease? Which values of X arein line with empirical data?please show steps on financail calculator if possible? The real risk-free rate is 3.25%. Inflation is expected to be 2.00% this year and 3.75% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2 year Treasury securities? Do not round Intermediate calculations. Round your answer to two decimal places. % What is the yield on 3-year Treasury securities? Do not round intermediate calculations. Round your answer to two decimal places.
- Suppose that, holding yield constant, investors are indifferent as to whether they hold bonds issued by the federal govemment or bonds issued by state and local governments (that is, they consider the bonds the same with respect to default risk, information costs, and liquidity) Suppose that state governments have issued perpetuities (or consoles) with $78 coupons and that the federal govemment has also issued perpetuities with $78 coupons. If the state and federal perpetuites both have after-tax yields of 8%, what are their pre-tax yields? (Assume that the relevant federal income tax rate is 31.13%) * The pre-tax yield on the state perpetuity will be______________% * The pre-tax yield on the federal perpetuity will be_______________%The demand ? (in billions of £) for a bond with coupon rate 5% and face value ?? = 1000, and two years to maturity as a function of its price ? is ? = 4000 − 2?. The supply in (billions of £)asafunctionofthepriceofthebondis ? = 2?+ 400. There is a business cycle expansion, so both supply and demand shifts. After the shift, the new demand curve is given by: ?=4000+?−2? ,whereas the new supply curve is ?=2? + 200. For which values of ? will the interest increase/decrease? Which values of ? are in line with empirical data?Obtain weekly data from Refinitiv Eikon and plot the interest rates (bid and ask mid- rate) on 2-year commonwealth government bond (AU2Y-TBOND) and 10 yearcommonwealth government bond (au 10Y-TBOND) from January 2020. Determine theshape of the yield curve by using one of the interest rate theories you know and shareyour opinion on whether the Australian economy is heading for a boom or for arecession. Explain your choice.
- Explore the assertion regarding the state ofFinancial Markets, both globally and within the Caribbean region, evaluating whether they arecharacterized by market perfection or imperfection. Argue in favorthat markets are perfect , allowing for a comprehensive examination ofthe topic. To enhance the analysis of key points in the subject argument, it is imperative to employrelevant finance theories or concepts which either validate or refute the EMH. These concepts serveas a robust framework for understanding financial phenomena. By leveraging established concepts,one can systematically evaluate the evidence presented, thereby bolstering the argument'scredibility and depth.Suppose Maria prefers to buy a bond with a 7%expected return and 2% standard deviation of itsexpected return, while Jennifer prefers to buy a bondwith a 4% expected return and 1% standard deviationof its expected return. Can you tell if Maria is more orless risk-averse than Jennifer?9 A program, if implemented, will operate for 10 years for certain. Your best guess is that after year 10 and following each year thereafter there will be a 0.02 probability the program will end. Real net benefits are $25 the first year and are expected to grow 1% per year as long as the program is in operation. Benefits accrue at the end of the year. The real discount rate is 3.5%. What is the NPV of the horizon value of net benefits following year 10, as seen from time 0, the beginning of the first year
- The Determinants of Market Interest Rates Expected Interest Rate The real risk-free rate is 3.5%. Inflation is expected to be 296 this year and 4.75% during the next 2 years. Assume that the maturity risk premium is zero. a. What is the yield on 2-year Treasury securities? Round your answer to two decimal places. placesSuppose that in a given bond market, there is currentlyno information that can help potential bond buyers todistinguish between bonds. Which bond issuers havean incentive to disclose information about their companies? Explain whyIf monetary policy becomes more transparent about thefuture course of interest rates, how will stock prices beaffected, if at all?