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Year 10 Yr Inflation 20 Yr Bond Yield 1956 0.025814878 0.0345 1957 0.019835599 0.0323 1958 0.018893854 0.0382 1959 0.022195243 0.0447 1960 0.01787712 0.0380 1961 0.012678833 0.0415 1962 0.013016258 0.0395 1963 0.01403842 0.0417 1964 0.015728851 0.0423 1965 0.017275388 0.0450 1966 0.01777163 0.0455 1967 0.017790153 0.0556 1968 0.020756834 0.0598 1969 0.025364711 0.0687 1970 0.029381652 0.0648 1971 0.032067163 0.0597 1972 0.034253897 0.0599 1973 0.041402732 0.0726 1974 0.05241841 0.0760 1975 0.057507736 0.0805 1976 0.058964243 0.0721 1977 0.062688494 0.0803 1978 0.066992335 0.0898 1979 0.074192762 0.1012 1980 0.081095098 0.1199 1981 0.0866764 0.1334 1982 0.087135714 0.1095 1983 0.082136616 0.1197 1984 0.073938451 0.1170 1985 0.070644276 0.0956 1986 0.066962977 0.0789 1987 0.064604182 0.0920 1988 0.059994599 0.0918 1989 0.051328855 0.0816 1990 0.045045962 0.0844 1991 0.039173687 0.0730 1992 0.03820184 0.0726 1993 0.03714698 0.0654 1994 0.035819774 0.0799 1995 0.034844836 0.0603

Year 10 Yr Inflation 20 Yr Bond Yield 1956 0.025814878 0.0345 1957 0.019835599 0.0323 1958 0.018893854 0.0382 1959 0.022195243 0.0447 1960 0.01787712 0.0380 1961 0.012678833 0.0415 1962 0.013016258 0.0395 1963 0.01403842 0.0417 1964 0.015728851 0.0423 1965 0.017275388 0.0450 1966 0.01777163 0.0455 1967 0.017790153 0.0556 1968 0.020756834 0.0598 1969 0.025364711 0.0687 1970 0.029381652 0.0648 1971 0.032067163 0.0597 1972 0.034253897 0.0599 1973 0.041402732 0.0726 1974 0.05241841 0.0760 1975 0.057507736 0.0805 1976 0.058964243 0.0721 1977 0.062688494 0.0803 1978 0.066992335 0.0898 1979 0.074192762 0.1012 1980 0.081095098 0.1199 1981 0.0866764 0.1334 1982 0.087135714 0.1095 1983 0.082136616 0.1197 1984 0.073938451 0.1170 1985 0.070644276 0.0956 1986 0.066962977 0.0789 1987 0.064604182 0.0920 1988 0.059994599 0.0918 1989 0.051328855 0.0816 1990 0.045045962 0.0844 1991 0.039173687 0.0730 1992 0.03820184 0.0726 1993 0.03714698 0.0654 1994 0.035819774 0.0799 1995 0.034844836 0.0603

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter5: Inverse, Exponential, And Logarithmic Functions
Section5.3: The Natural Exponential Function
Problem 40E
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Year 10 Yr Inflation 20 Yr Bond Yield
1956 0.025814878 0.0345
1957 0.019835599 0.0323
1958 0.018893854 0.0382
1959 0.022195243 0.0447
1960 0.01787712 0.0380
1961 0.012678833 0.0415
1962 0.013016258 0.0395
1963 0.01403842 0.0417
1964 0.015728851 0.0423
1965 0.017275388 0.0450
1966 0.01777163 0.0455
1967 0.017790153 0.0556
1968 0.020756834 0.0598
1969 0.025364711 0.0687
1970 0.029381652 0.0648
1971 0.032067163 0.0597
1972 0.034253897 0.0599
1973 0.041402732 0.0726
1974 0.05241841 0.0760
1975 0.057507736 0.0805
1976 0.058964243 0.0721
1977 0.062688494 0.0803
1978 0.066992335 0.0898
1979 0.074192762 0.1012
1980 0.081095098 0.1199
1981 0.0866764 0.1334
1982 0.087135714 0.1095
1983 0.082136616 0.1197
1984 0.073938451 0.1170
1985 0.070644276 0.0956
1986 0.066962977 0.0789
1987 0.064604182 0.0920
1988 0.059994599 0.0918
1989 0.051328855 0.0816
1990 0.045045962 0.0844
1991 0.039173687 0.0730
1992 0.03820184 0.0726
1993 0.03714698 0.0654
1994 0.035819774 0.0799
1995 0.034844836 0.0603
QUESTION 20 Problem 5b: The interest rates on government bonds are set at the time the funds are borrowed and are then held constant at that rate for the duration of the bond. Financial theory suggests that price inflation and interest rates are interrelated. The Excel file named Final P5 Data.xlsx contains the following observations, for each calendar year 1956-1995. • The Calendar Year (Year) The average historical consumer inflation rate over the 10-year period ending in Year (10-yr Inflation) • The historical annual coupon bond yield issued in Year for a treasury bond with a 20-year duration (20-yr Bond Yield) You will be requested to investigate to what extent 10-yr Inflation in the decade preceding Year influences 20-yr Bond Yield. Use Minitab and Final P5 Data.x/sx to fit a regression model suitable for your investigation (Note: Data in the first column Year is not relevant to solve this problem). b) Under the regression assumptions, the slope estimate R, has a well known probability distribution. Provide the degrees of freedom df of this distribution
Transcribed Image Text:QUESTION 20 Problem 5b: The interest rates on government bonds are set at the time the funds are borrowed and are then held constant at that rate for the duration of the bond. Financial theory suggests that price inflation and interest rates are interrelated. The Excel file named Final P5 Data.xlsx contains the following observations, for each calendar year 1956-1995. • The Calendar Year (Year) The average historical consumer inflation rate over the 10-year period ending in Year (10-yr Inflation) • The historical annual coupon bond yield issued in Year for a treasury bond with a 20-year duration (20-yr Bond Yield) You will be requested to investigate to what extent 10-yr Inflation in the decade preceding Year influences 20-yr Bond Yield. Use Minitab and Final P5 Data.x/sx to fit a regression model suitable for your investigation (Note: Data in the first column Year is not relevant to solve this problem). b) Under the regression assumptions, the slope estimate R, has a well known probability distribution. Provide the degrees of freedom df of this distribution
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