A bond pays $10,000 per year for the next 10 years. The bond costs $90,000 now. Inflation is expected to be 6 percent over the next 10 years. Answer parts (a) and (b) a. What is the current dollar internal rate of return? Use linear interpolation with x, = 1.95% and x2 = 2.00% to find your answer. The current dollar internal rate of return is (Type an integer or decimal rounded to two decimal places as needed.) percent b. What is the real internal rate of return? The real internal rate of return is percent. (Type an integer or decimal rounded to two decimal places as needed.)

A bond pays $10,000 per year for the next 10 years. The bond costs $90,000 now. Inflation is expected to be 6 percent over the next 10 years. Answer parts (a) and (b) a. What is the current dollar internal rate of return? Use linear interpolation with x, = 1.95% and x2 = 2.00% to find your answer. The current dollar internal rate of return is (Type an integer or decimal rounded to two decimal places as needed.) percent b. What is the real internal rate of return? The real internal rate of return is percent. (Type an integer or decimal rounded to two decimal places as needed.)

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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Question #21 is attacthed below in image. Based on the spot rates in Problem 21, and assuming a constant real interest rate of 2 percent, what are the expected inflation rates for the next four years?
At present, the real risk free rate of interest is 0.020 while inflation is expected to be 0.020 for the next 2 years. If a 2 year Treasure Note vields 0.047. What is the Maturity Risk Premium for this 2 ear Treasury Note? GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES) Assume the expected inflation rate to be 0.034. If the current current real rate of Iinterest is 0.065. What would the nominal rate of interest be? GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES) At present, 10 year Treasury Bonds are yielding 0.039. while a 10 year Corporate Bond is yielding 0.066. If the liquidity risk premium on the corporate bond is 0.003. What is the Corporate Bonds Default Risk Premium?ANSWER IN DECIMAL NUMBERS ONLY TO 3 PLACES (AS SHOWN IN THE You are considering an investment that you expect will return an 0.089 return next year and you expect your real rate of return will be 0.125. What do you expect inflation to be next vear?GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES)
The real risk-free rate is 2.70%, inflation is expected to be 3.45% this year, and the maturity risk premium is zero. Ignoring any cross-product terms, i.e., if averaging is required, use the arithmetic average, what is the equilibrium rate of return on a 1-year Treasury bond? Please explain process and show calculations
Assume that the real risk-free rate is 2% and the average annual expected inflation rate is 4%. The DRP and LP for Bond A are each 2%, and the applicable MRP is 3%. What is Bond A's interest rate?
The real risk-free rate is 2.5% and inflation is expected to be 2.25% for the next 2 years. A 2-year Treasury security yields 6.75%. What is the maturity risk premium for the 2-year security? Round your answer to one decimal place. ______%
At present, the real risk free rate of interest is 0.020 while inflation is expected to be 0.020 for the next 2 years. If a 2 year Treasure Note vields 0.045. What is the Maturity Risk Premium for this 2 ear Treasury Note? GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES) Assume the expected inflation rate to be 0.040. If the current current real rate of Iinterest is 0.083. What would the nominal rate of interest be? GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES) At present, 10 year Treasury Bonds are yielding 0.039. while a 10 year Corporate Bond is yielding 0.066. If the liquidity risk premium on the corporate bond is 0.003. What is the Corporate Bonds Default Risk Premium?ANSWER IN DECIMAL NUMBERS ONLY TO 3 PLACES (AS SHOWN IN THE You are considering an investment that you expect will return an 0.038 return next year and you expect your real rate of return will be 0.69. What do you expect inflation to be next vear?GIVE ANSWER IN DECIMAL NUMBERS. (3 DECIMAL PLACES)
Please show working. Please answer 1 and 2 1. The real risk-free rate is 2.75%, and inflation is expected to be 4.00% for the next 2 years. A 2-year Treasury security yields 8.25%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places. 2. The real risk-free rate is 2.9%. Inflation is expected to be 2.2% this year, 4.8% next year, and 2.65% thereafter. The maturity risk premium is estimated to be 0.05 × (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Do not round intermediate calculations. Round your answer to two decimal places.
i need the answer quickly
Suppose the real risk-free rate of interest is r*=4%�*=4% and it is expected to remain constant over time. Inflation is expected to be 1.60% per year for the next two years and 3.90% per year for the next three years. The maturity risk premium is 0.1×(t−1)%0.1×�−1%, where t� is number of years to maturity, a liquidity premium is 0.45%, and the default risk premium for a corporate bond is 1.40%. The average inflation during the first 4 years is2.37% . What is the yield on a 4-year Treasury bond? 4.30% 8.90% 6.75% 7.05% What is the yield on a 4-year BBB-rated bond? 8.90% 7.50% 7.05% 8.45% If the yield on a 5–year Treasury bond is 7.38% and the yield on a 6–year Treasury bond is 7.83%, the expected inflation in 6 years is . (Hint: Do not round intermediate calculations.)
Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 2.00% per year. What is the real risk-free rate of return, r*? The cross-product term should be considered , i.e., if averaging is required, use the geometric average. (Round your final answer to 2 decimal places.)
Please solve using Excel and show/explain the formulas.
(Inflation and Interest rates) What would you expect the nominal rate of interest to be if the real rate is 4.1 percent and the expected inflation rate is 6.6 percent ? The nominal rate of interest would be ____ % (Round to two decimal places.)

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