ZuoTi.Pro
Question

The relationship between interest rates and bond maturity is called: A) Liquidity premium B) Yield to maturity C) Term struct
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Option c Term structure of interest rates It provides relationship between interest rates and different maturities.
These relation can be of three types upward sloping interest curve, downward sloping curve and humped curve.

0 0
Add a comment
Know the answer?
Add Answer to:
The relationship between interest rates and bond maturity is called: A) Liquidity premium B) Yield to...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The relationship between nominal interest rates on default-free, pure discount securities and the time to maturity...

    The relationship between nominal interest rates on default-free, pure discount securities and the time to maturity is called the: Fisher effect. interest rate risk premium. inflation premium. term structure of interest rates. liquidity effect.

  • 1. Central Motors is a no-growth firm and has two million shares outstanding. It is expected to earn a constant $10...

    1. Central Motors is a no-growth firm and has two million shares outstanding. It is expected to earn a constant $10 million per year on its assets. If all earnings are paid out as dividends and the cost of capital is 5%, calculate the current price per share for the stock A) $200 B) $100 C) $250 D) $2000 E) $1000 I 2. The relationship between interest rates and bond maturity is called: A) Liquidity premium B) Yield to maturity...

  • Assume that the real risk-free rate is 2% and that the maturity risk premium is zero....

    Assume that the real risk-free rate is 2% and that the maturity risk premium is zero. If a 1-year Treasury bond yield is 5% and a 2-year Treasury bond yields 8%, what is the 1-year interest rate that is expected for Year 2? Calculate this yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places. % What inflation rate is expected during Year 2? Do not round intermediate calculations. Round your answer to...

  • just the answers please 4. In the market for money, when the Fed decreases the money...

    just the answers please 4. In the market for money, when the Fed decreases the money stock, the money supply curve shifts to the and the interest rate , everything else held constant. A) right; rises B) right; falls C) left; falls D) left; rises Milton Friedman called the response of lower interest rates resulting from an increase in the money supply the effect A) liquidity B) price level C) expected-inflation D) income Questions based on "06 Financial Markets -...

  • Which of the following is correct? A. The maturity premiums embedded in the interest rates on...

    Which of the following is correct? A. The maturity premiums embedded in the interest rates on us treasury securities are due primarily to the fact that the probability of default is lower on long-term bonds than on short-term goals. B. If the maturity risk premium were zero and the rate of inflation were expected to increase in the future, then the yield curve for us treasurt securities would, other things held constant, have an upward slope. C. According to the...

  • 30. If there is an excess demand for money using the liquidity preference theory) A. Individual...

    30. If there is an excess demand for money using the liquidity preference theory) A. Individual sell bonds causing interest rates to fall B. Individuals sell bonds causing interest rates to rise C. Individuals buy bond causing interest rates to fall D. Individuals buy bonds causing interest rates to rise 31. If the money demand curve shifts to the left. Interest rates ----and bond prices A. Fall; rise B. Fall; fall C. Rise; rise D. Rise;fall 32. When the growth...

  • Short-term (one-year) interest rates over the next 3 years are 3.0%, 3.5%, 4.0%. A liquidity premium...

    Short-term (one-year) interest rates over the next 3 years are 3.0%, 3.5%, 4.0%. A liquidity premium of 15 basis points is required for each year of a bond’s maturity. Assume the liquidity premium theory of the term structure holds. What is the interest rate on a 3-year bond?

  • Assume that the real interest rate is 2%, the default risk premium is 3%, the liquidity...

    Assume that the real interest rate is 2%, the default risk premium is 3%, the liquidity premium is 1%, and the maturity risk premium is 1% per year. Additional, the expected inflation rate is 3% next year, 1% the year after, and 10% from then on. What are the nominal interest rates for: a) 1-year note? b) 5-year note? c) does this produce an inverted yield curve? Why or why not? Please show all work!

  • The term structure of interest rates: Graphs the level of corporate bond rates based on default...

    The term structure of interest rates: Graphs the level of corporate bond rates based on default risk premiums and maturity. Graphs the coupon rate, current yield, and yield to maturity of a bond. Graphs the level of interest rates by maturity and is usually upward-sloping. Graphs the level of coupons by maturity and is also called a yield curve.

  • Calculating interest rates problem: 3. Calculating interest rates The real risk-free rate (r*) is 2.8% and...

    Calculating interest rates problem: 3. Calculating interest rates The real risk-free rate (r*) is 2.8% and is expected to remain constant. Inflation is expected to be 6% per year for each of the next four years and 5% thereafter. The maturity risk premium (MRP) is determined from the formula: 0.1(t - 10%, where t is the security's maturity. The liquidity premium (LP) on all Harrington Horticulture Co.'s bonds is 1.05%. The following table shows the current relationship between bond ratings...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT