Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 5%, E(21) = 6%, E(31) = 6.40%, E (471) = 6.75% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-matur Treasury securities. Note: Round your percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34). Years 1 2 3 4 Current (Long-term) Rates 0.50 % 6.49 % 6.83 % 7.09%

Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 5%, E(21) = 6%, E(31) = 6.40%, E (471) = 6.75% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-matur Treasury securities. Note: Round your percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34). Years 1 2 3 4 Current (Long-term) Rates 0.50 % 6.49 % 6.83 % 7.09%

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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Unbiased Expectations Theory Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows 1R1=4.85%, E(2r1) =5.85%, E(3r1) =6.35%, E(4r1)=6.70% Using the unbiased expectations theory, what is the current (long-term) rate for four-year-maturity Treasury securities?
11 Unbiased Expectations Theory Suppose that the current one-year rate (one-year spot rate) and expected one-year T- bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows 1R₁ = 4.85%, E(271) = 5.85%, E(371) = 6.35%, E(471) = 6.70% Using the unbiased expectations theory, what is the current (long-term) rate for four-year-maturity Treasury securities? Multiple Choice 5.9352% 5.9375% 1.6340% Saved 6.7000% Help Save & Exit Submit
Suppose that the current one-year rate (one- year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1=6%, E(2r1) =7%, E(3r1) =7.5% E(4r1)=7.85% 1 Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. Show your answers in percentage form to 3 decimal places.
TERM STRUCTURE Using Pure Expectations theory to predict future rates: I ■ Suppose: 1¹₁= 1%, 1¹₂= 2%, 113= 3% What does that imply about the 1-year forward rate in 2 years (f₁), and the 2-year forward rate in 1 year (₂f₂)?
Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 0.3%, E(2r 1) = 1.3%, E(3r1) = 10.4%, E(41) 10.75% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your percentage answers to 3 decimal places. (e.g., 32.161)) One-year Two-year Three-year Four-year Current (Long-Term) Rates 0.300 % 0.799 % 5.006% %
1. Suppose the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three year (i.e. years 2, 3, and 4, respectively) are as follows: 。R₁ = 6%, E (R₂) =7% E(₂R)= 7.5% E(R)=7.85% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year maturity Treasury securities. Plot the resulting yield curve.
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 9%, E(21) = 10%, E31) = 10.60%, E(41) = 10.95% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. Note: Round your percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34). Years Current (Long-term) Rates 1 % 2 % 3 % 4 %
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 6%, E(2r1) = 7%, E(3r1) = 7.60%, E(4r1) = 7.95% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your answers to 2 decimal places.)
Suppose that the current 1-year rate ( 1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e years 2,3, and 4 respectively) as follows: 1R1=3.22%, E(2r1)=4.65%,E(3r1)=5.15%,E(4r1)=6.65% Using the unbiased expectations theory, calculate the current (long-term) for one-, two-, three-, and four- year- maturity treasury securities. ( Round your answers to 2 decimal places.)
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:1R1 = 6%, E(2r1) = 7%, E(3r1) = 7.5%, E(4r1) = 7.85%Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your answers to 2 decimal places.)
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (I.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 1%, E(211) = 4.30%, E(31) = 4.80%, E471) = 6.30% Using the unblased expectations theory, calculate the current (longterm) rates for 1-, 2-, 3-, and 4-year-maturity Treasury securities. Plot the resulting yield curve. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) Year 1234 Current (Long-term) Rates %
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e.. years 2, 3, and 4, respectively) are as follows: 1R1 = 6%, E(21) = 7%, Bar1) = 7.5 %, Bar) = 7.85% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two, three-, and four-year-maturity Treasury securities. (Round your answers to 2 decimal places.) Year 1 2 3 4 Current (Long-term) Rates

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