What is the maturity of a U.S. Treasury bill with a bond equivalent yield of 4.58 percent and a face value of $100000 that is priced at $99333.55. Assume It's a leap year.
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- D6 Assume you own a 2-year US Treasury Note with a 5% coupon and a 7-year US Treasury Note with a 0% coupon. If market interest rates decrease by 100 basis points in the 2-year maturity and declined by only 75 basis points in the 7-year maturity, which bond would experience the smallest market value change? a. 5% US Treasury due in 2 years b. 0% US Treasury due in 7 years c. Both would change by the same amount d. Prices would not change since the coupons are fixedook int ences Problem 2-11 (LG 2-7) Suppose we observe the three-year Treasury security rate (13) to be 4.9 percent, the expected one-year rate next year-E(21)-to be 5.4 percent, and the expected one-year rate the following year-E(31)-to be 6.4 percent. If the unbiased expectations theory of the term structure of interest rates holds, what is the one-year Treasury security rate? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places. (e.g., 32.16)) _________% One-year Treasury security rateDeterminant of Interest Rates The real risk-free rate of interest is 4%. Inflation is expected to be 2% this year and 4% during each of the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury securities?
- ANSWER ASAP PLZ You observe a one-year discount US Treasury bond in the market with the following characteristics: Face Value of $100 and Price of $91. 1) What is the implied one-year interest rate? 2) You also observe a 2-year US Treasury bond selling at par with the following characteristics: Face value of $1,000 and annual coupon of 10%. What is the implied one-year Treasury rate for the second year?Question 1 2.BT is considering investing in government bonds. The current price of a P100 bond with 10 years to maturity is P88.The bonds have a coupon rate of 6% and repay face value of P100 at the end of the 10 years.Calculate the yield to maturity. 3.Explain four comparative advantages of debt as a source of finance over equity.Question 2 (at home, to practice) Suppose the interest rate on a bond offered to investors by National Savings and Investments (a UK government bank) is 4% per year + inflation and the expected inflation rate in the UK for next year is 2.7%. A. What is the exact expected nominal interest rate for this bond next year? B. Using this numerical example, explain in your own words the difference between nominal interest rates and real interest rates. C. Assume this bond matures in five years and assume that the annual inflation rate is constant for the next five years. What would be the final payment at maturity for an investment of £120? 1
- QUESTION 7 Consider the market for a bond which has a face value of $2,000, pays a coupon of $100, and matures in 1 year (that is, you will get the face value and one coupon payment next year). Suppose the demand for such bonds is given by P=4,000-2Q, and that the supply of such bonds is given by P=1,000+Q. What is the yield to maturity if one were to purchase the bond at the equilibrium price? 5% .05% 10% .10%which one is correct please confirm? QUESTION 21 If the return on U.S. Treasury bills is 7.02%, the risk premium is 2.32%, and the inflation rate is 4.16%, then the real rate of return is ____. a. 7.02% b. 6.48% c. 4.70% d. 2.86%Suppose the U.S. Treasury offers to sell you a bond for $697.25. No payments will be made until the bond matures 4 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? a. 5.51% b. 35.86% c. 7.48% d. 9.43% e. 12.77%
- Q1 (a) Explain FOUR (4) reasons that influence the changes which make debt securityyields vary. (b) If a government bond is expected to mature in two years and has a current priceof RM950, calculate the bond's interest rate/yield if it has a par value of RM1,000and a promised coupon payment rate of 10%.(c) From part (b) above, illustrate how the bond price/value if the interest rate/yieldmoves up (increase).4. Suppose the U.S. Federal Reserve offers a bond for $635.20 at 8 years to maturity. You will not have to issue payments until the maturity date, at which time you will receive $950. Calculate the interest rate if you decide to buy it. Determine the interest rate if you manage to buy it at a price of $555.10-2 The rate of return that you would earn if you bought a bond and held it to its maturity date is called the bond's yield to maturity, or YTM. If interest rates in the economy rise after a bond has been issued, what will happen to the bond's price and to its YTM? Does the length of time to maturity affect the extent to which a given change in interest rates will affect the bond's price?
