When long term rate is higher than short term rate, Expectation Theory explains this with which of following statement: 1) people expect rate to rise in future 2) long term rate carries interest rate risk premium A. 1 only B. 2 only C. both 1 and 2 If the interest rate risk premium is 25 basis point, and the short term rate is 3%, then this means that the long term interest rate is A. none above B. 2.75% C. 3.025% D. 2.075% E. 3.25% Consider a Zero coupon bond maturing in 2 months with annual YTM at 6%. The PV of this bond can be computed with semiannual approach by dividing the par value by a discount factor of with exponent of А. 3%;B 2/3 В. 3%;B 1/3 C. 6%; 2/3 D. 3%; 1/6

When long term rate is higher than short term rate, Expectation Theory explains this with which of following statement: 1) people expect rate to rise in future 2) long term rate carries interest rate risk premium A. 1 only B. 2 only C. both 1 and 2 If the interest rate risk premium is 25 basis point, and the short term rate is 3%, then this means that the long term interest rate is A. none above B. 2.75% C. 3.025% D. 2.075% E. 3.25% Consider a Zero coupon bond maturing in 2 months with annual YTM at 6%. The PV of this bond can be computed with semiannual approach by dividing the par value by a discount factor of with exponent of А. 3%;B 2/3 В. 3%;B 1/3 C. 6%; 2/3 D. 3%; 1/6

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 26P

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