The one-year spot interest rate is r1 = 6.0%, and the two-year rate is r2 =...
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 %
Homework Answers
Answer is 8.01%
1-year rate in 1 year = 1.07^2/ 1.06-1
1-year rate in 1 year=8.01%
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The one-year spot interest rate is r1 = 6.0%, and the two-year rate is r2 =...
The one-year spot interest rate is r1 = 6.6% and the two-year rate is r2 =...
The one-year spot interest rate is r1 = 6.6% and the two-year rate is r2 = 7.6%. If the expectations theory is correct, what is the expected one-year interest rate in one year’s time?
Suppose the term structure of interest rates has these spot interest rates: r1 = 6.5%. r2...
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...
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.)
Suppose the term structure of interest rates has these spot interest rates: rı = 5.00%, r2...
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...
Assume the current interest rate on a one-year Treasury bond ( ) is 1.10 percent, the...
Assume the current interest rate on a one-year Treasury bond ( ) is 1.10 percent, the current rate on a two-year Treasury bond (R2) is 1.26 percent, and the current rate on a three-year Treasury bond (1R3) is 1.37 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the one-year interest rate expected on T-bills during year 3 (E3or 3)? (Do not round intermediate calculations. Round your answer to 2 decimal places....
9-18 Return to question Consider the following spot interest rates for maturities of one, two, three,...
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...
The one-year, two-year, three-year, and four-year spot rates for the theoretical spot rate curve are 5.0%,...
The one-year, two-year, three-year, and four-year spot rates for the theoretical spot rate curve are 5.0%, 6.0%, 6.5%, and 7%, respectively. According the expectations theory for the term structure of interest rates, what is the expected 2-year interest rate 2 years from today? Assume annual compounding.
Assume the current interest rate on a 1-year Treasury bond (,R) is 6.50 percent, the current...
Assume the current interest rate on a 1-year Treasury bond (,R) is 6.50 percent, the current rate on a 2-year Treasury bond (,R2) is 7.25 percent, and the current rate on a 3-year Treasury bond GRa) is 8.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f,? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ,R...
Consider the following spot interest rates for maturities of one, two, three, and four years. 77...
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...
1) The 9-year spot interest rate is 5.44%, the 3-year spot rate is 3.61%. What is...
1) The 9-year spot interest rate is 5.44%, the 3-year spot rate is 3.61%. What is the forward rate you can find using the pure expectations theory? Round to the nearest 0.01%. E.g., if your answer is 5.78%, enter it as 5.78. 2) The 8-year spot interest rate (the longer of the spot rates, or the n-year rate) is 5.35% and the 3-year (k-year) forward rate expected (n - k) years from now has been estimated to be 6.98%. What...
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...
Assume the current interest rate on a one-year Treasury bond ( ) is 1.10 percent, the current rate on a two-year Treasury bond (R2) is 1.26 percent, and the current rate on a three-year Treasury bond (1R3) is 1.37 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the one-year interest rate expected on T-bills during year 3 (E3or 3)? (Do not round intermediate calculations. Round your answer to 2 decimal places....
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...
Assume the current interest rate on a 1-year Treasury bond (,R) is 6.50 percent, the current rate on a 2-year Treasury bond (,R2) is 7.25 percent, and the current rate on a 3-year Treasury bond GRa) is 8.50 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the 1-year forward rate expected on Treasury bills during year 3, 3f,? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ,R...
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...
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