1 year 0.38% Source: U.S. Department of the Treasury. Date 03/05/2010 2 year 0.9% 3 year 1.47% Assuming that the liquidity premium theory is correct, on March 5, 2010, what did investors expect the interest rate to be on the one-year Treasury bill two years from that date if the term premium on a two-year Treasury note was 0.01% and the term premium on a three-year Treasury note was 0.05%? The expected interest rate is%. (Round your response to two decimal places.)

1 year 0.38% Source: U.S. Department of the Treasury. Date 03/05/2010 2 year 0.9% 3 year 1.47% Assuming that the liquidity premium theory is correct, on March 5, 2010, what did investors expect the interest rate to be on the one-year Treasury bill two years from that date if the term premium on a two-year Treasury note was 0.01% and the term premium on a three-year Treasury note was 0.05%? The expected interest rate is%. (Round your response to two decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose the central bank of Oman issued Treasury bill on behalf of the government. The maturity of this bill is 91 days. And the required discount rate on this bill is 8 percent. Calculate the market price or present value of Treasur
1. It is 25 July 2022; you observe two treasury bills Price 99.7985 25 March 2023 98.3855 Maturity 25 September 2022 (a) What are appropriate discount factors for 2 months and 8 months? (b) What are the spot rates, with semi-annual compounding, for 2 months and 8 months? (c) What would be a fair price for a bond, maturing on 25 March 2023, paying a 5% per annum coupon rate, with a semi-annual coupon? (d) Now suppose that you observed a bond, maturing on 25 Septem- ber 2023, paying a 1% per annum coupon rate (with semi-annual coupons), trading at a yield to maturity of 2.75%. Use the DMO formula to calculate the bond's price. (e) What is an appropriate discount factor for 25 September 2023? (f) Calculate forward rates (with semi-annual compounding) from 25 September 2022 to 25 March 2023, and from 25 March 2023 to 25 September 2023.
Consider the following table for a seven-year period: Returns Year U.S. Treasury Bills Inflation 4.10% 1 -1.28% 2 3.95 -2.42 3 4.85 -1.32 4 5.27 0.74 5 3.07 -6.56 1.95 -9.48 7 1.68 -1.43 What was the average real return for Treasury bills for this time period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return %
9. During the first week of May 2008, the nominal interest rate on 30-year fixed-rate mortgage loans as reported by the Wall Street Journal was 6 percent per year. (a) Suppose that the inflation rate in the United States turns out to be 3 percent per year, on average, over the next 30 years. What will the real interest rate on these mortgage loans be in this case? (b) Suppose that, instead, US inflation turns out to be 5 percent per year, on average, over the next 30 years. What will the real interest rate on mortgage loans be in this case? (c) Who "wins," in the sense of being better off financially, if inflation turns out to be 5 percent instead of 3 percet: the households who take out new mortgage loans today at 6 percent, or the banks that make new mortgage loans today at 6 percent?
Please answer as quickly as possible
Consider the following table for a seven-year period: Year 1 2 3 4 5 6 7 U.S. Treasury Bills 3.90% Returns 3.75 4.65 5.07 2.87 1.75 1.48 Inflation -1.24% -2.38 -1.28 0.70 -6.52 -9.44 -1.39 What was the average real return for Treasury bills for this time period? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
. Treasury notes and bonds. Use the information in the following table: What is the price in dollars of the February 2000 Treasury note with semiannual payment if its par value is $100,000? What is the current yield of this note? What is the price in dollars of the February 2000 Treasury note? (Round to the nearest cent.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Today is February 15, 2008 Type Issue Date Price Note Feb 2000 Coupon Rate 7.25% Maturity Date 2-15-2010 YTM Current Yield Rating 4.324% AAA
One-year Treasury bills currently earn 3.60 percent. You expect that one year from now, 1-year Treasury bill rates will increase to 3.80 percent. The liquidity premium on 2 - year securities is 0.05 percent. If the liquidity premium theory is correct, what should the current rate be on 2 - year Treasury securities? Note: Do not round intermediate calculations. Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).
Denger
If Treasury bills are currently paying 6.35 percent and the inflation rate is 1.6 percent, what is the approximate and the exact real rate of interest? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) A. approximate real rate B. exact real rate
Give typing answer with explanation and conclusion "One-year Treasury bills currently earn 2.35% and you expect that one year from now, 1-year Treasury bill rates will increase to 2.61% and that two years from now, one-year Treasury bill rates will increase to 3.11%; If the unbiased expectations theory is correct, what should the current rate be on a three-year Treasury security?" one year is 14.6% what is it in decimal form
Nn. 120.

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