Table 5.1 1 year 2 years 3 years 1.07% 1.50% 1.71% 72- Table 5.1 shows the actual interest rates for Treasury securities of different maturities as issued on 02/11/2022. a) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the second year based on expectations theory of the term structure? A) 1.285% B) 1.93% C) 1.375% D) 2.57% b) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the third year based on expectations theory of the term structure? A) 1.43% B) 2.50% C) 1.50% D) 2.13% c) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the second year based on the liquidity premium theory of the term structure if the term premium on a two-year Treasury is 0.25%? A) 1.93% B) 1.83% C) 1.33% D) 1.43%
Table 5.1 1 year 2 years 3 years 1.07% 1.50% 1.71% 72- Table 5.1 shows the actual interest rates for Treasury securities of different maturities as issued on 02/11/2022. a) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the second year based on expectations theory of the term structure? A) 1.285% B) 1.93% C) 1.375% D) 2.57% b) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the third year based on expectations theory of the term structure? A) 1.43% B) 2.50% C) 1.50% D) 2.13% c) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the second year based on the liquidity premium theory of the term structure if the term premium on a two-year Treasury is 0.25%? A) 1.93% B) 1.83% C) 1.33% D) 1.43%
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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Transcribed Image Text:Table 5.1
1 year 2 years 3 years
1.07% 1.50% 1.71%
72- Table 5.1 shows the actual interest rates for Treasury securities of different maturities as issued on
02/11/2022.
a) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the
second year based on expectations theory of the term structure?
A) 1.285%
B) 1.93%
C) 1.375%
D) 2.57%
b) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the
third year based on expectations theory of the term structure?
A) 1.43%
B) 2.50%
C) 1.50%
D) 2.13%
c) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on a one-year Treasury bill in the
second year based on the liquidity premium theory of the term structure if the term premium on a two-year
Treasury is 0.25%?
A) 1.93%
B) 1.83%
C) 1.33%
D) 1.43%
d) Refer to Table 5.1 On this day, what did investors expect the interest rate to be on the one-year Treasury bill in
the third year based on the liquidity premium theory if the term premium on a two-year Treasury is 0.25% and the
term premium on a three-year Treasury is 0.4%?
A) 1.43%
B) 2.08%
C) 2.11%
D) 1.93%
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