[Related to Solved Problem 5.2b] Use the data on Treasury securities in the following table to answer the question:Date03/05/2010Source: U.S. Department of the Treasury.1 year0.38%2 year0.86%3 year1.6%Assuming that the liquidity premium theory is correct, on March 5, 2010, what did investors expect the interest rate to be on the one-year Treasury bill two years from that date if the term premiumon a two-year Treasury note was 0.03% and the term premium on a three-year Treasury note was 0.04%?The expected interest rate is %. (Round your response to two decimal places.)

Step 1:Using the principle of the liquidity premium, you must take into account the following…

Answered: [Related to Solved Problem 5.2b] Use…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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[Related to Solved Problem 5.2b] Use the data on Treasury securities in the following table to answer the question: 1 year 0.39% Date 2 year 3 year 03/05/2010 0.88% 1.56% Source: U.S. Department of the Treasury. Assuming that the liquidity premium theory is correct, on March 5, 2010, what did investors expect the interest rate to be on the one-year Treasury bill two years from that date if the term premium on a two-year Treasury note was 0.04% and the term premium on a three-year Treasury note was 0.06%? The expected interest rate is %. (Round your response to two decimal places.)
Suppose the following table shows yields to maturity of U.S. Treasury securities as of January 1, 2000. Based on the data in the table, calculate the implied forward one-year and two-year rates at January 1, 2002. y1=3.0% y2=3.5% y3=4.0% y4=4.5%
es www Year 1 2 3 4 5 Returns X59200 15 % -22 10 10 Y 22% 30 -27 "* 10 21 Using the returns shown above, calculate the arithmetic average returns, the variances, and the standard deviations for X and Y. (Do not round intermediate calculations. Enter your average return and standard deviation answers as a percent rounded to 2 decimal places, e.g., 32.16. Enter your variance answers rounded to 5 decimal places, e.g., .16161.) Average returns Variances Standard deviations X 15 % % % Y % &
Consider the following information for a period of years: Long-term government bonds Long-term corporate bonds Inflation Arithmetic Mean a. Long-term government bonds. b. Long-term corporate bonds 7.4% 7.5 4.2 a. What is the real return on long-term government bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the real return on long-term corporate bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. %
Consider the following table for a seven-year period: Returns Year U.S. Treasury Bills Inflation 3.55% -1.17% 1234567 3.40 4.30 4.72 2.52 1.40 1.13 Average real return -2.31 -1.21 0.63 -6.45 -9.37 -1.32 What was the average real return for Treasury bills for this time period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) %
Suppose we have the following Treasury bill returns and inflation rates over an eight- year period: Year Treasury Bills Inflation 9.57% 12345678 7.96% 8.76 6.59 5.74 6.17 8.41 11.38 13.02 13.22 7.71 5.48 7.47 9.84 14.14 13.56 c. What is the average real return for Treasury bills over this period? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return
Consider the following table for a seven-year period: Year 1 2 34467. 5 U.S. Treasury Bills 4.00% 3.85 4.75 5.17 2.97 1.85 1.58 Returns Average real return. Inflation -1.26% -2.40 -1.30 0.72 -6.54 -9.46 -1.41 What was the average real return for Treasury bills for this time period? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g... 32.16. %
. Treasury notes and bonds. Use the information in the following table: What is the price in dollars of the February 2000 Treasury note with semiannual payment if its par value is $100,000? What is the current yield of this note? What is the price in dollars of the February 2000 Treasury note? (Round to the nearest cent.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Today is February 15, 2008 Type Issue Date Price Note Feb 2000 Coupon Rate 7.25% Maturity Date 2-15-2010 YTM Current Yield Rating 4.324% AAA
Consider the following information for a period of years: Arithmetic Mean Long-term government bonds 7.1 % Long-term corporate bonds 7.2 Inflation 4.2 a. What is the real return on long-term government bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the real return on long-term corporate bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Treasury notes and bonds. Use the information in the following table: . Assume a $100,000 par value. What is the yield to maturity of the August 2000 Treasury bond with semiannual payment? Compare the yield to maturity and the current yield . How do you explain this relationship? What is the yield to maturity of the August 2000 Treasury bond?
Suppose on January 15, 2018, the U.S. Treasury issued a ten-year inflation indexed note with a coupon of 4%. On the date of issue, the CPI (consumer price index) was 211. By January 15, 2028, the CPI index had decreased to 161. What principal and coupon payment was made on January 15, 2028? (Note: U.S. Treasury pays semi-annual coupons) The CPI index deppreciated by The principal payment is $ The coupon payment is $ (Round to five decimal places.) (Round to the nearest cent.) (Round to the nearest cent.)
Consider the following information for a period of years: Arithmetic Mean Long-term government bonds 7.6% Long-term corporate bonds 7.7 Inflation 4.6 What is the real return on long-term government bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the real return on long-term corporate bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

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