5)
One-year bond rate in year 2:
= (1+5%)^2/(1+3%)-1
= 7.03%
Hence, correct option is D. 7.00%
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5. The current one year interest rate is 3.00% on a T-bill. The current two year...
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The current one-year T-bill rate is .49 percent and the expected one-year rate 12 months from now is 1.00 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security?
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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?
The current one-year T-bill rate is .48 percent and the expected one-year rate 12 months from now is .90 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) what is the current rate?
The current one-year T-bill rate is .40 percent and the expected one-year rate 12 months from now is 1.28 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
The current market interest rate for one year maturity bond is 10%. The forward rate for a one year investment starting in one year from now is 8%. According to the expectations theory of term structure, the current two year maturity market interest rate is O 8%. larger than 10%. between 8% and 10%. O smaller than 8%.
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The table below shows current and expected future one-year interest rates, as well as current interest rates on multiyear bonds. Use the table to calculate the liquidity premium for each multiyear bond. Year One-YearOne-Year Bond RateMultiyear Bond Rate12.00%2.00%24.00%4.00%37.00%5.00%49.00%7.00%511.00%10.00%The liquidity premiums for each year are given as: (Enter your responses rounded to two decimal places.)
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