The effect on yield curve immediately after the announcement of the new congress administration. Introduction: Yield: Yield is the percentage of securities at which the return is provided by the company to its investors. Yield can be there in the form of dividend and interest. Steeper Yield Curve: A curve which has shown the expected increment in the interest rates due to inflation is known as steeper yield curve.

Question

3 years ago, you invested $9,200. In 3 years, you expect to have $14,167. If you expect to earn the same annual return after 3 years from today as the annual return implied from the past and expected values given in the problem, then in how many years from today do you expect to have $28,798?

Answer 1

Question

Chapter 6, Problem 6Q

a.

Summary Introduction

To identify: The effect on yield curve immediately after the announcement of the new congress administration.

Introduction:

Yield: Yield is the percentage of securities at which the return is provided by the company to its investors. Yield can be there in the form of dividend and interest.

Steeper Yield Curve: A curve which has shown the expected increment in the interest rates due to inflation is known as steeper yield curve.

b.

Summary Introduction

To identify: The effect on yield curve if the Congress and administration exists for two or three years in future.

Introduction:

Yield: Yield is the percentage of securities at which the return is provided by the company to its investors. Yield can be there in the form of dividend and interest.

Steeper Yield Curve: A curve which has shown the expected increment in the interest rates due to inflation is known as steeper yield curve.

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3 years ago, you invested $9,200. In 3 years, you expect to have $14,167. If you expect to earn the same annual return after 3 years from today as the annual return implied from the past and expected values given in the problem, then in how many years from today do you expect to have $28,798?

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