Question

Based on economists’ forecasts and analysis, one-year T-bill rates and liquidity premiums for the next four years are expected to be as follows: 1R1 = .37% E(2r1) = .62% L2 = 0.04% E(3r1) = .72% L3 = 0.15% E(4r1) = 1.02% L4 = 0.18% Calculate the four annual rates. (Round your answers to 2 decimal places.

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

121 e 39 (dx 08:15 E ENG 2101 2020 ES EF EG EH EI E E K EL EM EN EO EP 1R1 E(2r1) E(3r1) E(4r1) 0.37% 0.62% 0.72% 1.02% 0.04% 0.15% 0.18% 528 0.37% 530 LONG TERM RATES 1R1 = 532 533 1R2= 534 ((1+1R1)(1+E(2r1)+L2)^1/2-1 ((1+0.37%)(1+0.62%+0.04%))^(1/2) - 1 0.51% 1R3= ((1+1R1)*((1+E(2-1) + L2)*(1+E(3r1) + L3))^(1/3) - 1 ((1+0.37%)*(1+0.62% +0.04%)*(1+0.72% +0.15%))^(1/3) - 1 0.63% 1R4 = ((1+1R1)*((1+E(2r1) + L2)*(1+E(3r1) + L3)*(1 + E(4r1+L4))^(1/4) - 1 ((1+0.37%)*(1+0.62% +0.04%)*(1+0.72% +0.15%)*(1+1.02% +0.18%))^(1/4) - 1 0.77% 544 545 YIELD SPOT Sheet2 AFN BANKING NOTE 51 53 CLEAN PRICE S10 BIDDING UNDERWRITING | EUAC AW LIFE | LP, IP, MRP, INFLATION WARRANT relund 54 55 ... :