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- If inflation is anticipated to be 6 percent during the next year, while the real rate of interest for one-year loan is 5 percent, then what should the nominal rate of interest be for a risk-free one-year loan? a. 11% b. 6%c. 5%d. 12%Consider the following spot interest rates for maturities of one, two, three, and four years. r₁ = 4.3% 2 = 4.9% √3 = 5.6% r4 = 6.4% What are the following forward rates, where fkn refers to a forward rate beginning in k year(s) and extending for n year(s)? f2,1 = ? f3,1 = ? f2,2 = ?Consider the following spot interest rates for maturities of one, two, three, and four years. r1 = 6.10% r2 = 6.00% r3 = 5.80% r4 = 5.50% What are the following forward rates? Hint: f1, k refers to a forward rate for the period beginning in one year and extending for k years. fk,1 refers to a forward rate beginning in k years and extending for 1 year. f1,1 : f1,2 : f1,3 : f2,1: f3,1 :
- The two-year interest rate is 10.4%, and the expected annual inflation rate is 5.2%. a. What is the expected real interest rate? b-1. If the expected rate of inflation suddenly rises to 7.2%, what does Fisher's theory say about how the real interest rate will change? b-2. If the expected rate of inflation suddenly rises to 7.2%, what will be the new nominal rate? Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 What is the expected real interest rate? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Expected real interest rate %consider the following spot interest rates for maturities of one, two, three, and four years. r1=4.1%, r2=4.5% r3=5.2% r=6.0% what are teh following forward rates, where fk.1 refers toa forward rate beginning in the k years and extending for the 1 year?1. Suppose the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three year (i.e. years 2, 3, and 4, respectively) are as follows: 。R₁ = 6%, E (R₂) =7% E(₂R)= 7.5% E(R)=7.85% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year maturity Treasury securities. Plot the resulting yield curve.
- Estimate the annual percent rate for the add on loan Using the given number of payments and annual interest-rate. Use the formula APR = 2nr/n+1 N= 48; R= 8% APR=???Suppose the interest rate on a 3-year treasury note is 2.75%, and 6-year notes are yielding 3.50%. Based on the expectations theory, what does the market believe that 3-year treasuries will be yielding 3 years from now?Suppose we observe the 3-year Treasury security rate (1R3) to be 8 percent, the expected 1-year rate next year—E(2r1)—to be 4 percent, and the expected one-year rate the following year—E(3r1)—to be 6 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year Treasury security rate, 1R1? (Round your answer to 2 decimal places.)
- Suppose the actual inflation rate is 2% over the next year. Once the loan has been repaid, what is the nominal rate of interest and real rate of interest?Suppose we observe the 3-year Treasury security rate (1R3) to be 8 percent, the expected 1-year rate next year—E(2r1)—to be 4 percent, and the expected one-year rate the following year—E(3r1)—to be 6 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the 1-year Treasury security rate, 1R1?QUESTION 1 Suppose that the current one-year rate and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: IRI-2.47%, E(2rl)-3.11%, E(3rl)-4.23%, E(4rl)-5.18% Using the unbiased expectations theory, calculate the current rate for three-year- maturity Treasury securities (Write your answer in percentage not decimal for example 5.78%) current rate for three-year-maturity = 3.27%