An analyst evaluating securities has obtained the following information. The real rate of interest is 2.7% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.1% next year, 3.1% the following year, 4.1% the third year, and 5.1% every year thereafter. The maturity risk premium is estimated to be 0.1 x (t-1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Do not round intermediate calculations. Round your answer to one decimal place. 4.80 % Show All Feedback b. What is the yield on a 5-year T-bond? Do not round intermediate calculations. Round your answer to one decimal place. 6.99 % Show All Feedback c. What is the yield on a 5-year corporate bond? Do not round intermediate calculations. Round your answer to one decimal place. 8.49 % Show All Feedback x
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- An analyst evaluating securities has obtained the following information. The real rate of interest is 2.4% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.3% next year, 3.3% the following year, 4.3% the third year, and 5.3% every year thereafter. The maturity risk premium is estimated to be 0.1 × (t – 1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Round your answer to one decimal place. b. What is the yield on a 5-year T-bond? Round your answer to one decimal place. c. What is the yield on a 5-year corporate bond? Round your answer to one decimal place.An analyst evaluating securities has obtained the following information. The real rate of interest is 2.9% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.4% next year, 3.4% the following year, 4.4% the third year, and 5.4% every year thereafter. The maturity risk premium is estimated to be 0.1 × (t – 1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Round your intermediate calculations and final answer to two decimal places. % b. What is the yield on a 5-year T-bond? Round your intermediate calculations and final answer to two decimal places. % c. What is the yield on a 5-year corporate bond? Round your intermediate calculations and final answer to two decimal places. %An analyst evaluating securities has obtained the following information. The real rate of interest is 3% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.8% next year, 3.8% the following year, 4.8% the third year, and 5.8% every year thereafter. The maturity risk premium is estimated to be 0.1 x (t-1) %, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Round your answer to one decimal place. % b. What is the yield on a 5-year T-bond? Round your answer to one decimal place. % c. What is the yield on a 5-year corporate bond? Round your answer to one decimal place. %
- An analyst evaluating securities has obtained the following information. The real rate of interestis 2% and is expected to remain constant for the next 3 years. Inflation is expected to be 3% nextyear, 3.5% the following year, and 4% the third year. The maturity risk premium is estimated to be0.1 x (t – 1)%, where t = number of years to maturity. The liquidity premium on relevant 3-yearsecurities is 0.25% and the default risk premium on relevant 3-year securities is 0.6%.a. What is the yield on a 1-year T-bill?b. What is the yield on a 3-year T-bond?c. What is the yield on a 3-year corporate bond?An analyst evaluating securities has obtained the following information. The real rate of interest is 2.9% and is expected to remain constant for the next 5 years. Inflation is expected to be 2% next year, 3% the following year, 4% the third year, and 5% every year thereafter. The maturity risk premium is estimated to be 0.1 \times (t-1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5 - year securities is 1%. a. What is the yield on a 1-year T-bill? Round your answer to one decimal place. % b. What is the yield on a 5-year T-bond? Round your answer to one decimal place. % c. What is the yield on a 5-year corporate bond? Round your answer to one decimal place. %The following information was gathered by a security analyst. The real rate of interest is 4% and is expected to remain constant for the next 5 years, Inflation is expected to be 2% next year, 3.5% the following year, 5% the third to fifth year. The maturity risk premium is expected to be 0.3 x (t-1)%, The liquidity premium on relevant 5-year securities is 0.75% and the default risk premium on relevant 5-year securities is 0.6%. What is the yield in percent on a 5-year corporate bond? A 10-year Treasury bond yields 6.4%, and a 10-year corporate bond yields 8.4%. The market expects that inflation will average 2.5% over the next 10 years. Assume that maturity risk premium is equal to 0.3(T-1)%, and that the annual real risk-free rate will remain constant over the next 10 years. What is the liquidity risk premium of the 10-year treasury bond? A 10-year Treasury bond yields 6.4%, and a 10-year corporate bond yields 8.4%. The market expects that inflation will average 2.5% over the next 10…
- The following information was gathered by a security analyst. The real rate of interest is 4% and is expected to remain constant for the next 3 years, Inflation is expected to be 2% . The maturity risk premium is expected to be 0.3 x (t-1)%, The liquidity premium on relevant 3-year securities is 0.75% and the default risk premium on relevant 3-year securities is 0.6%. What is the yield in percent on a 3-year corporate bond?An analyst made the following assessments: Inflation is expected to be 1% this year, 2% next year, 3%, 4%, 5% on the next succeeding years, and then for the next succeeding years it will be constant throughout at a rate of 7%. The real risk-free rate is expected to remain at 4% for the next 15 years. The maturity risk premium is 0.1%(t), where t = the maturity of the bond in years. A 10-year corporate bond currently yields 15%. Assume that the above assessments are true, what will be the yield on the bond, one year from now assuming that the bond's default and liquidity premium is the same? (In percentage, put percentage sign)Quantitative Problem: An analyst evaluating securities has obtained the following information. The real rate of interest is 2.9% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.2% next year, 3.2% the following year, 4.2% the third year, and 5.2% every year thereafter. The maturity risk premium is estimated to be 0.1 x (t-1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Do not round intermediate calculations. Round your answer to one decimal place. % b. What is the yield on a 5-year T-bond? Do not round intermediate calculations. Round your answer to one decimal place. % c. What is the yield on a 5-year corporate bond? Do not round intermediate calculations. Round your answer to one decimal place. %
- Quantitative Problem: An analyst evaluating securities has obtained the following information. The real rate of interest is 2.2% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.1% next year, 3.1% the following year, 4.1% the third year, and 5.1% every year thereafter. The maturity risk premium is estimated to be 0.1 x (t-1) %, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Do not round intermediate calculations. Round your answer to two decimal places. % b. What is the yield on a 5-year T-bond? Do not round intermediate calculations. Round your answer to two decimal places. c. What is the yield on a 5-year corporate bond? Do not round intermediate calculations. Round your answer to two decimal places. Check My Work (3 remaining)The real risk-free rate is 2% which is projected to be constant indefinitely. The expected inflation for year 1 is 1%, for year 2 is 2%, and it will increase by 1% each year after. Liquidity Premium is 1% and the default risk premium is 2.5%. Maturity Risk premium for long-term securities is computed as estimated to be 0.5%(t - 1), where “t” is the years of maturity of the bond. The yield for an 15-year government bond is a. 17.0% b. 17.5% c. 60.0% d. 16.0%The real risk-free rate is 2.25%. Inflation is expected to be 2.5%this year and 4.25% during the next 2 years. Assume that the maturity risk premium iszero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasurysecurities?