Homework Answers
Yield to maturity (YTM) = [(Face value/Present value)^1/Time period]-1.
= (1000/850)-1
= 0.1765
Yield to maturity is 17.65%
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1s $21007 = (2000*12%)/2100=11.43% 6. What is the yield to maturity on a one-year $1000 Treasury...
5. What is the current yield of a coupon bond of 12% if the face value...
5. What is the current yield of a coupon bond of 12% if the face value is $2000 and its price is $2100? 6. What is the yield to maturity on a one-year, $1000 Treasury bill with a current price of $8502 7. What is the difference between interest rates and rate of returns?
1. Economists have developed three major theories of consumption and saving behavior. Discuss each one of...
1. Economists have developed three major theories of consumption and saving behavior. Discuss each one of them. a) The life-cycle hypothelis (Modigliani and Brumberg, 1954; Modigliani and Ando, 1957, Ando and Modigliani, 1963); b) The permanent income hypothesis (Friedman, 1957); c) The relative income hypothesis (Dusenberry, 1949). 2. An accounting firm will need $17,000 in 5 years to replace its computer system. What periodic deposits to a sinking fund paying quarterly interest at a 9% annual rate will achieve that...
Suppose the interest rate and therefore the yield to maturity) increases by the same amount on...
Suppose the interest rate and therefore the yield to maturity) increases by the same amount on Treasury bills and bonds. Between a one-year Treasury bill, and a twenty-year Treasury bond, an investor would prefer a one-year Treasury bill The following are reasons why the yield to maturity can be less than than the return of a bond except that O A. the time to maturity and the holding period are not the same OB. the coupon payment over the purchase...
A one-year Treasury bill offers a 5% yield to maturity. A two-year Treasury bill offers a...
A one-year Treasury bill offers a 5% yield to maturity. A two-year Treasury bill offers a 5.4% yield to maturity. What is the expected forward rate for the second year if the expectation hypothesis holds? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below. Enter your answer rounded to 2 DECIMAL PLACES.
2. Suppose that the current yield on 10-year maturity Treasury note is 3% and the current...
2. Suppose that the current yield on 10-year maturity Treasury note is 3% and the current yield on 10-year maturity TIPS is 0.5%. If the expected U.S. inflation rate of this year is 2%, which security do you want to buy between TIPS and Treasury note (in other words, which one generates higher return)? Why? 3. Between TIPS and regular Treasuries, which has greater price risk if other factors are constant? Why?
sorry its finance*** A one-year Treasury bill offers a 5% yield to maturity. A two-year Treasury...
sorry its finance***
A one-year Treasury bill offers a 5% yield to maturity. A two-year Treasury bill offers a 5.4% yield to maturity. What is the expected forward rate for the second year if the expectation hypothesis holds? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below. Enter your answer rounded to 2 DECIMAL PLACES @ %
A one-year Treasury bill offers a 7% yield to maturity. The market's concensus forecast is that...
A one-year Treasury bill offers a 7% yield to maturity. The market's concensus forecast is that one-year T-bills will offer 5% next year. What is the current yield on a two-year T-bill if the expectations hypothesis holds? Enter your answer as a percentage. Do not include the percentage sign in your answer Enter your response below. Enter your answer rounded to 2 DECIMAL PLACES.
2. An accounting firm will need $17,000 in 5 years to replace its computer system. What...
2. An accounting firm will need $17,000 in 5 years to replace its computer system. What periodic deposits to a sinking fund paying quarterly interest at a 9% annual rate will achieve that goal? Mary have saving plan with replacement rate equal to 75% of her preretirement income $60,000.00. She expect to live 15 years after retiring at age 65 and her age now is 40 years. If the real interest rate is 3% then a. What will be her...
One-year Treasury securities yield 6%. The market anticipates that 1-year from now 1-year Treasury securities will...
One-year Treasury securities yield 6%. The market anticipates that 1-year from now 1-year Treasury securities will yield 7.5%. If the pure expectations theory is correct, what should be the yield today for 2-year Treasury securities? The real risk-free rate of interest is 1.7%. Inflation is expected to be 5% this year and 6% during the next 2 years. Assume that the maturity risk premiums is zero. What is the yield on 1-year treasury securities? Suppose you and other investors expect...
A one-year Treasury bill offers a 5% yield to maturity. The market's concensus forecast is that...
A one-year Treasury bill offers a 5% yield to maturity. The market's concensus forecast is that one-year T-bills will offer 4% next year. What is the current yield on a two-year T-bill if the expectations hypothesis holds? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below. Enter your answer rounded to 2 DECIMAL PLACES.
5. What is the current yield of a coupon bond of 12% if the face value is $2000 and its price is $2100? 6. What is the yield to maturity on a one-year, $1000 Treasury bill with a current price of $8502 7. What is the difference between interest rates and rate of returns?
1. Economists have developed three major theories of consumption and saving behavior. Discuss each one of them. a) The life-cycle hypothelis (Modigliani and Brumberg, 1954; Modigliani and Ando, 1957, Ando and Modigliani, 1963); b) The permanent income hypothesis (Friedman, 1957); c) The relative income hypothesis (Dusenberry, 1949). 2. An accounting firm will need $17,000 in 5 years to replace its computer system. What periodic deposits to a sinking fund paying quarterly interest at a 9% annual rate will achieve that...
Suppose the interest rate and therefore the yield to maturity) increases by the same amount on Treasury bills and bonds. Between a one-year Treasury bill, and a twenty-year Treasury bond, an investor would prefer a one-year Treasury bill The following are reasons why the yield to maturity can be less than than the return of a bond except that O A. the time to maturity and the holding period are not the same OB. the coupon payment over the purchase...
A one-year Treasury bill offers a 5% yield to maturity. A two-year Treasury bill offers a 5.4% yield to maturity. What is the expected forward rate for the second year if the expectation hypothesis holds? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below. Enter your answer rounded to 2 DECIMAL PLACES.
2. Suppose that the current yield on 10-year maturity Treasury note is 3% and the current yield on 10-year maturity TIPS is 0.5%. If the expected U.S. inflation rate of this year is 2%, which security do you want to buy between TIPS and Treasury note (in other words, which one generates higher return)? Why? 3. Between TIPS and regular Treasuries, which has greater price risk if other factors are constant? Why?
sorry its finance***
A one-year Treasury bill offers a 5% yield to maturity. A two-year Treasury bill offers a 5.4% yield to maturity. What is the expected forward rate for the second year if the expectation hypothesis holds? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below. Enter your answer rounded to 2 DECIMAL PLACES @ %
A one-year Treasury bill offers a 7% yield to maturity. The market's concensus forecast is that one-year T-bills will offer 5% next year. What is the current yield on a two-year T-bill if the expectations hypothesis holds? Enter your answer as a percentage. Do not include the percentage sign in your answer Enter your response below. Enter your answer rounded to 2 DECIMAL PLACES.
2. An accounting firm will need $17,000 in 5 years to replace its computer system. What periodic deposits to a sinking fund paying quarterly interest at a 9% annual rate will achieve that goal? Mary have saving plan with replacement rate equal to 75% of her preretirement income $60,000.00. She expect to live 15 years after retiring at age 65 and her age now is 40 years. If the real interest rate is 3% then a. What will be her...
A one-year Treasury bill offers a 5% yield to maturity. The market's concensus forecast is that one-year T-bills will offer 4% next year. What is the current yield on a two-year T-bill if the expectations hypothesis holds? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below. Enter your answer rounded to 2 DECIMAL PLACES.
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