5-4: Suppose today is January 2, 2022, and investors expect the annual nominal risk-free interestrates in 2026 and 2027 to be:Year20262027One-Year Rate (IRE)4.5%2.3%Currently a four-year Treasury bond that matures on December 13, 2025 has an interest rate thatequal to 2.5 percent. What is the yield on Treasury bonds that mature at the end of (a) 2026 (a five-year bond) and (b) 2027 (a six-year bond)? Assume the bonds have no risk. (LO 5-3)

To solve this problem, we need to determine the yield on Treasury bonds maturing in 2026 (five-year…

Answered: 5-4: Suppose today is January 2, 2022,…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter5: The Cost Of Money (interest Rates)

Section: Chapter Questions

Problem 15PROB

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Suppose today is January 2, 2022, and investors expect the annual nominal risk-free interest rates in 2026 and 2027 to be: Year One-Year Rate (rRF) 2026 4.5 % 2027 2.1 Currently, a four-year Treasury bond that matures on December 31, 2025 has an interest rate equal to 3.0 percent. Assume the bonds have no risk. What is the yield on Treasury bonds that mature at the end of 2026 (a five-year bond)? Round your answer to one decimal place. _____ % What is the yield on Treasury bonds that mature at the end of 2027 (a six-year bond)? Round your answer to one decimal place. _____ %
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this is for intro to finance.
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You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons. Rate ?? 6.252 6.163 Maturity Month/Year May 36 May 41 May 51 Bid 103.5462 104.4952 ?? Asked 103.6340 104.6409 ?? Change Ask Yield +.3015 2.329 +.4293 +.5405 ?? 4.031 In the above table, find the Treasury bond that matures in May 2036. What is the coupon rate for this bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
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You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons. Rate ?? 6.202 6.158 Maturity Month/Year May 36 May 39 May 45 Bid 103.4599 104.4939 ?? Asked 103.5327 104.6396 ?? Change Ask Yield +.3287 5.979 +.4281 +.5392 ?? 4.011 In the above table, find the Treasury bond that matures in May 2039. What is your yield to maturity if you buy this bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Yield to maturity %
You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons. Rate ?? 5.674 6.208 Maturity Month/Year Bid May 31 103.4729 May 34 May 40 104.5069 ?? Asked 103.5457 104.6526 ?? Change Ask Yield +.3132 +.4401 +.5522 6.179 ?? 4.211 In the above table, find the Treasury bond that matures in May 2034. What is your yield to maturity if you buy this bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Yield to maturity %

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