As per the unbiased expectations theory:
One year = 1.005 =(1+r)^1 = 0.5%
Two year = 1.005*1.015 = (1+r)^2 = r = 0.009987 = 0.999%
Three year = 1.005*1.015*1.099 = (1+r)^3 = r = 0.038827 = 3.883%
Four year = 1.005*1.015*1.099*1.1025 = (1+r)^4 = r = 0.05439199 = 5.439%
Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the...
Unbiased Expectations Theory Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1=6.95%, E(2r1) =7.45%, E(3r1) =8.45% E(4r1)=8.95% Using the unbiased expectations theory, what is the current (long-term) rate for four-year-maturity Treasury securities?
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 3.18%, E(2r1) = 4.60%, E(3r1) = 5.10%, E(4r1) = 6.60% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Current (Long-Term) Rates 1 _____.__% 2 _____.__% 3...
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 2.62%, E(2r1) = 3.90%, E(3r1) = 4.40%, E(4r1) = 5.90% Using the unbiased expectations theory, calculate the current (long-term) rates for 1-, 2-, 3-, and 4-year-maturity Treasury securities. Plot the resulting yield curve. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Unbiased Expectations Theory Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1=4.40%, E27) =5.40%, E37)=5.90%, E471)=6.25% Using the unbiased expectations theory, what is the current (long-term) rate for four-year-maturity Treasury securities? Multiple Choice 5.4852% 0 5.4875% 0 6.2500% 0 1.5270%
Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1 R1 = 6%, E1291) = 7%, 431) = 7.40%, E1491) = 7.75% Using the unbiased expectations theory, calculate the current long-term) rates for 1-, 2-, 3-, and 4-year-maturity Treasury securities. (Round your answers to 2 decimal places.) Years Current (Long- Term) Rates
mers 0-0 v Help Save & Exit Subm Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: 1R1 = 3.26%, E(251) = 4.70%, B(371) = 5.20%, (471) = 6.70% Using the unbiased expectations theory, calculate the current long-term) rates for 124 3., and 4-year-maturity Treasury securities. Plot the resulting yield curve. (Do not round Intermediate calculations. Round your answers to...
Assume the current interest rate on a one-year Treasury bond (1R1) is 2.17 percent, the current rate on a two-year Treasury bond (1R2) is 2.33 percent, and the current rate on a three-year Treasury bond (1R3) is 2.44 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the one-year interest rate expected on T-bills during year 3 (E(3r1) or 3f1)?
Based on economists’ forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = 1.85 % E(2r1) = 2.75 % L2 = 0.06 % E(3r1) = 3.15 % L3 = 0.08 % E(4r1) = 3.60 % L4 = 0.13 % Using the liquidity premium theory, determine the current (long-term) rates. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Years/Current (long-Term) Rates 1 2 3...
Based on economists’ forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = 1.80 % E(2r1) = 2.70 % L2 = 0.05 % E(3r1) = 3.10 % L3 = 0.07 % E(4r1) = 3.55 % L4 = 0.12 % Using the liquidity premium theory, determine the current (long-term) rates. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Years Current (Long-Term) Rates 1 %...
On May 23, 20XX, the existing or current (spot) one-year, two-year, three-year, and four-year zero-coupon Treasury security rates were as follows: 1R1 = 4.55 percent,1R2 = 4.75 percent,1R3 = 5.25 percent,1R4 = 5.95 percent Using the unbiased expectations theory, calculate the one-year forward rates on zero-coupon Treasury bonds for years two, three, and four as of May 23, 20XX.