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In February 2009, Treasury 8.5s of 2020 yielded 3.2976%. What was their price? If the yield rose to 4%, what would happen to the price?
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- Treasury bill yield is 10%, ABC company’s expected return for the next year is 18%, beta of ABC company is 2. If everything is in equilibrium as required by CAPM, what is the market’s expected return for the next year? 14% 8.5% 11% 21%4 - Based on economistsAc€?c forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = .90% E(2r1) = 2.05% L2 = 0.09% E(3r1) = 2.15% L3 = 0.12% E(4r1) = 2.45% L4 = 0.14% 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. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Current (Long-term) Rates 1 % 2 % 3 % 4 % 6 - On March 11, 20XX, the existing or current (spot) 1-, 2-, 3-, and 4-year zero coupon Treasury security rates were as follows: 1R1 = 0.90%, 1R2 = 1.50%, 1R3 = 1.90%, 1R4 = 2.05% Using the unbiased…Treasury bill yield is 10%, ABC company’s expected return for the next year is 18%, beta of ABC company is 2. If everything is in equilibrium as required by CAPM, what is the market’s expected return for the next year? a. 14% b. 8.5% c. 11% d. 21%
- The Consumer Price Index (CPI) was recently forecast to be 3.3%., implying that 3.3% will be the annual inflation rate. What is the minimum rate of return that a Treasury bill must earn to reach your investment goal of a 2% real rate of return? also, if Major Company pays a $2.10 annual cash dividend (D0) and it plans to keep the dividend at $2,10 for the future since no future growth is anticipated. If the stockholders require a rate of return of 12 percent, what is the price of the common stock?The average annual return on the S&P SOO Index from 1988 to 1995 was 15.8 percent The average annual T-bill yield during the same period was 5.8 percent What was the market risk premium during these ten years?The level of the Syldavia market index is 21,900 at the start of the year and 26,400 at the end. The dividend yield on the index is 4.7%. What is the return on the index over the year? If the interest rate is 6%, what is the risk premium over the year? If the inflation rate is 8%, what is the real return on the index over the year? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places.
- The level of the Syldavian market index is 23,000 at the start of the year and 27,500 at the end. The dividend yield on the index is 5.5%. What is the return on the index over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) If the interest rate is 8%, what is the risk premium over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) If the inflation rate is 9%, what is the real return on the index over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)The S&P500 is trading at 4,200, and the expected dividend over the next year is $63.00. You expect the economy to grow by 3% annually, and the annual inflation rate will be 5% over the long term. The yield to maturity on 10-year US Treasuries is 6.0% What is the long-term expected return on the S&P500? 3.500% 9.500% 1.500% 7.500%.The average annual return on the S&P 500 Index from 1996 to 2005 was 13.27 percent. The average annual T-bill yield during the same period was 3.92 percent.What was the market risk premium during these ten years? (Round your answer to 2 decimal places.) Average Market Risk Premium: ___.__%
- YIELD CURVES Assume that yields on U.S. Treasury securities were as follows: Term Rate 6 months 4.69% 1 year 5.492 years 5.663 years 5.71 4 years 5.89 5 years 6.05 10 years 6.12 20 years 6.64 30 years 6.76 Plot a yield curve based on these data. What type of yield curve is shown? Whatinformationdoesthisgraphtellyou? Based on this yield curve, if you needed to borrow money for longer than 1 year, would it make sense for you to borrow short term and renew the loan or borrow long term? Explain.What is the discount yield, bond equivalent yield, and effective annual return on a $2 million Treasury bill that currently sells at 99.5 percent of its face value and is 95 days from maturity?One-year Treasury bills yield 6 percent, while Treasury notes with 2-year maturities yield 6.7 percent. If the expectations theory holds (that is, the maturity risk premium is zero), what is the market’s forecast of what 1-year T-bills will be yielding one year from now?
