QUESTION 12 Today, markef interest rates on US Treasury securities are 3 8% on one yoar (maturity) Treasury bill and 5 6% on two yo (maury Troasury note If investors expect an interest rate on one yoar Treasury bill to become 42% one yoar later, then acconding to the liquidity premium theory, a liquidity premium on the two-yoar Treasury note should be place without % sign eg 12.3) %today (Answ up to the fest decimal

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter5: The Cost Of Money (interest Rates)
Section: Chapter Questions
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QUESTION 12
Today, market interest rates on US Treasury secunties are 3.8% on one yoar (maturity) Treasury bil and 5 6% on two yow (mahurity)
Treasury note If investors expect an interest rate on one yoar Treasury bill to become 4 2% one year later, then according to the
liquidity premium theory, a liquidity premium on the two-yoar Treasury note should be
place without % sign: eg 12.3)
% today (Answer up to the fiest decimal
QUESTION 13
Today, the interest rates are 4.9% on 3-month Treasury bill and 7% on 90-daya (3 month) commercial paper. Assuming that Treasury
bill is risk free, the risk premium on the 90-days commercial paper is
eg. 12.3)
%. (Answer up to the first decimal place without % sign
Transcribed Image Text:QUESTION 12 Today, market interest rates on US Treasury secunties are 3.8% on one yoar (maturity) Treasury bil and 5 6% on two yow (mahurity) Treasury note If investors expect an interest rate on one yoar Treasury bill to become 4 2% one year later, then according to the liquidity premium theory, a liquidity premium on the two-yoar Treasury note should be place without % sign: eg 12.3) % today (Answer up to the fiest decimal QUESTION 13 Today, the interest rates are 4.9% on 3-month Treasury bill and 7% on 90-daya (3 month) commercial paper. Assuming that Treasury bill is risk free, the risk premium on the 90-days commercial paper is eg. 12.3) %. (Answer up to the first decimal place without % sign
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