1) The 9-year spot interest rate is 5.44%, the 3-year spot rate is 3.61%. What is the forward rate you can find using the pure expectations theory? Round to the nearest 0.01%. E.g., if your answer is 5.78%, enter it as 5.78.
2) The 8-year spot interest rate (the longer of the spot rates, or the n-year rate) is 5.35% and the 3-year (k-year) forward rate expected (n - k) years from now has been estimated to be 6.98%. What is the other spot rate you need to know to find the forward rate given above using the pure expectations theory? Round to the nearest 0.01%. E.g., if your answer is 5.785%, record it as 5.79.
3) The 2-year spot interest rate is 5.2%, the 3-year forward rate expected 2 years from now has been estimated to be 5.17%. What is the other spot rate you need to know to find the forward rate given above using the pure expectations theory? Round to the nearest 0.01%. E.g., if your answer is 5.783%, record it as 5.78.
1)
6-year forward rate in 3 years:
= ((1+5.44%)^9/(1+3.61%)^3)^(1/6)-1
= 6.37%
Hence, 6-year forward rate in 3 years is 6.37%
1) The 9-year spot interest rate is 5.44%, the 3-year spot rate is 3.61%. What is...
please show all work The 2-year spot interest rate is 6.34% and the 5-year spot interest rate is 6.15%. What is the implied forward rate on a 3-year bond originating 2 years from now? O A 5.9% 8.6.14 OC. 6.8% one of the above Reset Selection Question 3 of 4 2.5 Points The bank forecasts the following one-year interest rates one and two years in the future: 4.85% and 5.20%. The current one-year interest rate is 4.56%. Estimate the annual...
2. You want to know what 2-year spot rates will be one year from now. According to the pure expecta- tions theory, this unknown forward rate of interest is implied by current spot rates. The simplest method of calculating this forward rate is to use today's 1-year and 3-year spot rates; i.e., the spot rates that take you out to the start of, and to the end of the forward period of time you are interested in. Thus: (1 +...
Question 32 1 pts The one year spot interest rate is 1.75% and the one year forward rate next year is 2.50%. According to the expectations theory. what is the current two-year rate? 3.20% 2.12% 1.98% 1.77%
The one-year spot interest rate is r1 = 6.0%, and the two-year rate is r2 = 7.0%. If the expectations theory is correct, what is the expected one-year interest rate in one year’s time? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected interest rate %
9. (10 points) Suppose that the spot in spot interest rate on a two-year zero-com year Zero-coupon bond is 40 ar zero-coupon bond is 3.0%, the Assume annual compound a. (6 points) Based on the pure expectat is the expected one-year inte approximation from class.) se that the spot interest rate one-year zero-coupon Zero-coupon bond is 4.0 and the spot interest rate on a three al compounding throughout the problem. points) Based on the nume r ations theory of the...
(1.) Consider the following annualized spot yields: Maturity Annualized Spot Rate One Year 5.00% Two Years 5.50% Three Years 6.00% Four Years 6.00% Five Years ? (a.) Assuming the expectations theory of the term structure is correct, calculate the expected one-year interest rate one year from now (i.e. 1f2). (b.) Assuming the expectations theory of the term structure is correct, calculate the expected one-year interest rate three years from now (i.e. 3f4). (c.) Suppose a forecasting service predicts that th...
The one-year spot interest rate is r1 = 6.6% and the two-year rate is r2 = 7.6%. If the expectations theory is correct, what is the expected one-year interest rate in one year’s time?
Check My Work The interest rate on 3-year Treasury securities is currently 6%. The interest rate on 4-year Treasury securities is currently 7%. Assume that the pure expectations theory is correct. To the closest whole percent, what is a reasonable forecast of the rate on 1-year Treasury securities 3 years from now?
Problem 3: (3 points) Suppose the interest rate on a 1-year T-bill is 5.0% and that on a 2-year T-note is 6.0%. Assume that the pure expectations theory is NOT valid, and the MRP is zero for a 1- year T-bill but 0.4% for a 2-year note. What is the equilibrium market forecast for 1-year rates 1 year from now?
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...