As a newly hired analyst, you are presented the following yields: 1-year 4.6%; 2-year 4.8%; 3-year 4.9%; 4-year 4.8% and 5-year 5.2%. What is the rate on a 1-year treasury Security, 4 years from now?
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As a newly hired analyst, you are presented the following yields: 1-year 4.6%; 2-year 4.8%; 3-year 4.9%; 4-year 4.8% and 5-year 5.2%. What is the rate on a 1-year treasury Security, 4 years from now?
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- Based on economists’ forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: 1R1 = 5.8%, E(2r1)=6.4%, L2=0.1%, E(3r1)= 6.9%, L3=0.2%, E(4r1)=7.5%, L4=0.3% Using the liquidity premium hypothesis, calculate the current rate for the three-year Treasury security.We observe the following treasury yields on a particular day: one-year 1.50%, two-year 2.25%, and three year 3.25%. If two-year term premium is 0.25%, on that day what did investors expect one-year interest rate to be next year?Group of answer choices a)1.875% b)2.5% c)2.375% d)2.25%A person purchased a 10-year, 5 percent coupon (semiannual payments) bond for $1,050.00, what is the (annual) yield-to-maturity? Show the steps in solving it using Financial Calculator.
- Suppose that the current one-year rate and expected one-year T-bill rates over the following three years (i.e., year 2, 3, and 4, respectively) are as follows: 1R1 = 5%, E(2r1)=6%, E(3r1)= 7%, E(4r1)=7.5% Using the unbiased expectations theory, calculate the current rates for three-year and four-year Treasury securities.The following information was gathered by a security analyst. The real rate of interest is 4% and is expected to remain constant for the next 5 years, Inflation is expected to be 2% next year, 3.5% the following year, 5% the third to fifth year. The maturity risk premium is expected to be 0.3 x (t-1)%, The liquidity premium on relevant 5-year securities is 0.75% and the default risk premium on relevant 5-year securities is 0.6%. What is the yield in percent on a 5-year corporate bond? A 10-year Treasury bond yields 6.4%, and a 10-year corporate bond yields 8.4%. The market expects that inflation will average 2.5% over the next 10 years. Assume that maturity risk premium is equal to 0.3(T-1)%, and that the annual real risk-free rate will remain constant over the next 10 years. What is the liquidity risk premium of the 10-year treasury bond? A 10-year Treasury bond yields 6.4%, and a 10-year corporate bond yields 8.4%. The market expects that inflation will average 2.5% over the next 10…Using the Treasury yield information in part c, calculate the following rates using geometric averages (round your answers to three decimal places): The 1-year rate, 1 year from now The 5-year rate, 5 years from now The 10-year rate, 10 years from now The 10-year rate, 20 years from now
- Ross Law is pondering on the following data. Three-year Treasury securities currently yield 6%, while 4 year treasury security yield 6.5%. Assume that the expectations theory holds, what does the market believe the rate will be on a 1-year treasury security, three years from now?An analyst evaluating securities has obtained the following information. The real rate of interest is 2.9% and is expected to remain constant for the next 5 years. Inflation is expected to be 2% next year, 3% the following year, 4% the third year, and 5% every year thereafter. The maturity risk premium is estimated to be 0.1 \times (t-1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5 - year securities is 1%. a. What is the yield on a 1-year T-bill? Round your answer to one decimal place. % b. What is the yield on a 5-year T-bond? Round your answer to one decimal place. % c. What is the yield on a 5-year corporate bond? Round your answer to one decimal place. %An analyst evaluating securities has obtained the following information. The real rate of interest is 3% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.3% next year, 3.3% the following year, 4.3% the third year, and 5.3% every year thereafter. The maturity risk premium is estimated to be 0.1 × (t – 1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Round your intermediate calculations and final answer to two decimal places. % b. What is the yield on a 5-year T-bond? Round your intermediate calculations and final answer to two decimal places. % c. What is the yield on a 5-year corporate bond? Round your intermediate calculations and final answer to two decimal places. %
- Based on economists forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: 1R1 = 0.50% E(21) = 0.88%L2 = 0.06%E(3г 1) = 0.98%L3 = 0.13%E(4r1) = 1.28%L4 = 0.16% Calculate the yield to maturity for four yearsAn analyst evaluating securities has obtained the following information. The real rate of interest is 2.9% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.4% next year, 3.4% the following year, 4.4% the third year, and 5.4% every year thereafter. The maturity risk premium is estimated to be 0.1 × (t – 1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Round your answer to one decimal place. b. What is the yield on a 5-year T-bond? Round your answer to one decimal place. c. What is the yield on a 5-year corporate bond? Round your answer to one decimal place.A 2-year Treasury security currently earns 1.79 percent. Over the next two years, the real risk-free rate is expected to be 1.35 percent per year and the inflation premium is expected to be 0.35 percent per year. Calculate the maturity risk premium on the 2-year Treasury security. (Round your answer to 2 decimal places.) Maturity risk premium ____.__%
