Consider the following spot interest rates for maturities of one, two, three, and four years.
r1 = 4.4% r2 = 4.9% r3 = 5.6% r4 = 6.4%
Assuming a constant real interest rate of 2 percent, what are the approximate expected inflation rates for the next four years? (Do
l1 ___ %
l2 ___
l3 ___
l4____
Inflation rate in year 1 = 0.044 - 0.02 = 2.20%
Inflation rate in year 2 = 0.049 - 0.02 = 2.90%
Inflation rate in year 3 = 0.056 - 0.02 = 3.60%
Inflation rate in year 4= 0.064 - 0.02 = 4.40%
Consider the following spot interest rates for maturities of one, two, three, and four years. r1...
Consider the following spot interest rates for maturities of one, two, three, and four years. r1 = 4.4% r2 = 4.9% r3 = 5.6% r4 = 6.4% Assuming a constant real interest rate of 2 percent, what are the approximate expected inflation rates for the next four years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Consider the following spot interest rates for maturities of one, two, three, and four years. r3-5.6 % r4= 6.4 % M=4.5% 2- 4.9% What are the following forward rates, where f, k refers to a forward rate for the period beginning in one year and extending for k years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) nces 11.1 1,2 f1,3 %
Question 8 1 pts Consider the following spot interest rates for maturities of one, two, three, and four years. r1=2.42% r2=3.82% r3=4.01% 64=4.79% What is the one year forward rate two years from now (in percent)? Use the exact formula. Answer to two decimals, carry intermediate calcs. to four decimals.
Consider the following spot interest rates for maturities of one, two, three, and four years. 77 = 5.3% 12 = 5.9% 13 = 6.6% 14 = 7.4% What are the following forward rates, where fq. k refers to a forward rate for the period beginning in one year and extending for k years? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. f1,1 |(1,2 6.50 8.01...
Suppose the term structure of interest rates has these spot interest rates: r1 = 6.5%. r2 = 6.3%, r3 = 6.1%, and r4 = 5.9%. a. What will be the 1-year spot interest rate in three years if the expectations theory of term structure is correct? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) 1-year spot in 3 years % b. If investing in long-term bonds carries additional risks, then how would...
9-18 Return to question Consider the following spot interest rates for maturities of one, two, three, and four years. = 4.1% 2 = 4.5% 13 = 5.2% 84-6.0% What are the following forward rates, where 9. k refers to a forward rate for the period beginning in one year and extending for k years? (Do not round Intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. 4.90 6.61 X...
E. 2: Liquidity Premium Hypothesis Based on economists' forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = 5.75% E(r2) = 6.85% L2 = .55% E(r3) = 7.05% L3 = .58% E(r4) = 7.25% L4 = .60% Using the liquidity premium hypothesis, what is the current rate on a four-year Treasury security? 7.2500% 7.1543% 7.8500% 6.7250%
Suppose the term structure of interest rates has these spot interest rates: rı = 5.00%, r2 = 5.40%, r3 = 5.70%, r4 = 5.90% and r5 = 6.00%. a. What will be the 1-year spot interest rate in three years if the expectations theory of term structure is correct? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) 1-year spot in 3 years b. If investing in long-term bonds carries additional risks, then...
The following table shows the inflation rate and unemployment rate, both in percent, for the years 1981-2008. We will investigate some methods for predicting unemployment. 4.4 X (L1) y (L2) Year Inflation Unemployment 1981 8.9 7.6 1982 3.8 9.7 1983 3.8 9.6 1984 3.9 7.5 1985 3.8 7.2 1986 1.1 7 1987 6.2 1988 4.4 5.5 1989 4.6 5.3 1990 6.1 5.6 1991 3.1 6.8 1992 2.9 7.5 1993 2.7 6.9 1994 2.7 6.1 1995 2.5 5.6 1996 5.4 1997...
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 %