Calculating Expected Rate for 2 years deposit,
(1 + r)2 = (1 + 0.023)(1 + 0.054)
r = 3.84%
Imagine that the interest rate on one year deposit is 2,3% and an expected one year...
Imagine that the interest rate on one year deposit is 2,3% and an expected one year interest rate one year from now is 5,4%? Based on these interest rates what would be an interest rate on two year deposit.
5a. Assume that the one-year interest rate is 1%, the two-year interest rate is 2% and the three-year interest rate is 2%. What is the expected one-year interest rate a year from now, and two years from, according to the expectations theory? b. Assume that the one-year interest rate is 1%, the two-year interest rate is 2%, the three-year interest rate is 2%, the liquidity premium for two-year interest rates is 0.3%. and the liquidity premium for three-year interest rates...
b. Assume that the one-year interest rate is 1%, the two-year interest rate is 2%, the three-year interest rate is 2%, the liquidity premium for two-year interest rates is 0.3%. and the liquidity premium for three-year interest rates is 0.4%. What is the expected one-year interest rate a year from now according to the liquidity premium theory?
Based on the Pure Expectations Theory of interest rates, if the one-year rate is 4%, and the one-year rate, one year from now, is expected to be 10%, the current two-year rate should be Select one: a. 7.0 % b. 3.0% c. 6.0% d. 14.0%
Imagine you get approved for a one-year fixed interest rate loan with BB&T. The interest rate of this loan is based on an expected inflation of 2%. However, one year later, the inflation rate increased to 3.5%. Does this news affect the real cost of your loan? How about BB&T? Are the bank real returns affected by this news? Essay Toolbar navigation More info
6.The current one-year Treasury bill rate is 4.2%. The expected one-year rate, one year from now is 5.1%. According to the pure expectations theory, what should be today’s rate for a two-year Treasury security. Select one: a. 4.200% b. 4.649% c. 5.100% d. 3.050% e. 4.973% 15,Until the 1960's, limits on the interest rates that banks could pay to depositors had virtually no impact on the ability of banks to compete with other financial institutions to obtain funds because: Select...
Using IFE, assume that the interest rate on a one-year insured home country bank deposit is 6%, and the interest rate on a 1-year insured foreign bank deposit is 8%. For the actual returns of these two investments to be similar from the perspective of investors in the home country, the foreign currency would have to change over the investment horizon by the following percentage:
3. Using IFE, assume that the interest rate on a one-year insured home country bank deposit is 6%, and the interest rate on a 1-year insured foreign bank deposit is 8%. For the actual returns of these two investments to be similar from the perspective of investors in the home country, the foreign currency would have to change over the investment horizon by the following percentage:
If the current one year interest rate is 3.5% and next year’s one year rate is 5.5%, what is the current two year rate? If the current three year interest rate is 7%, what is the current one year interest rate? Assume next year’s one year rate is 5.5% and the one year rate two years from now is 7.25%. Find the one year interest rate for four years from now. Assume the five year interest rate is 5.5%, the...
If market considers that Mexico expected inflation rate next year is 3% higher than expected US inflation rate what would be the impact on relative interest rates in the two countries? Is it going to impact the interest rates now or next year?