The following table gives the prices of Treasury Bonds. What is the zero-rate (continuously compounded) for 1.5 years? Bond Principal ($) 100 100 100 Time to Maturity (years) 0.5 1.0 1.5 Annual Coupon ($) 0 0 5.7 Bond Price ($) 97.3 94.1 101.1 (enter percentage in decimal form to four decimal places, i.e. eleven and a half percent would be entered as 0.1150)

The following table gives the prices of Treasury Bonds. What is the zero-rate (continuously compounded) for 1.5 years? Bond Principal ($) 100 100 100 Time to Maturity (years) 0.5 1.0 1.5 Annual Coupon ($) 0 0 5.7 Bond Price ($) 97.3 94.1 101.1 (enter percentage in decimal form to four decimal places, i.e. eleven and a half percent would be entered as 0.1150)

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 2EP

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Suppose we observe the following rates: 1R₁ = 6.2%, 1R₂ = 7.1%, and E(21) = 6.2%. If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium for year 2? (Round your intermediate calculations to 5 decimal places and final percentage answer to 2 decimal places. (e.g., 32.16)) Liquidity premium for year 2 %
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Suppose we observe the following rates: 1R1 = 4.1%, 1R2 = 4.9%, and E(21) = 4.1%. If the liquidity premium theory of the term structur of interest rates holds, what is the liquidity premium for year 2? (Round your intermediate calculations to 5 decimal places and fina percentage answer to 2 decimal places. (e.g., 32.16)) Liquidity premium for year 2 %
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