14. Suppose that the current three-year rate (three-year spot rate) and expected one-year T- bill rates over the following years are as follows: 1R3 = 12%, E(2r1 ) = 8%, E( 3r1 ) = 10% What should be the current spot rate for one-year treasury bill? 9.00% 5.59% 18.26% 18.80%

14. Suppose that the current three-year rate (three-year spot rate) and expected one-year T- bill rates over the following years are as follows: 1R3 = 12%, E(2r1 ) = 8%, E( 3r1 ) = 10% What should be the current spot rate for one-year treasury bill? 9.00% 5.59% 18.26% 18.80%

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

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Question

14. Suppose that the current three-year rate (three-year spot rate) and expected one-year T-
bill rates over the following years are as follows:
1R3 = 12%, E(201) = 8%, E( 31 ) = 10%
What should be the current spot rate for one-year treasury bill?
9.00%
5.59%
18.26%
18.80%
9.99%

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