Question

1. Interest rates on 4-year Treasury securities are currently 5.7%, while 6-year Treasury securities yield 7.3%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round your intermediate calculations. Round your answer to two decimal places.

Answer #1

4 year security yield=5.7%= | 0.057 | |||

6 year security yield=7.3%= | 0.073 | |||

Future Value of $1 investment for 6 year buying six year security now | 1.526154 | (1.073^6) | ||

Assume 2 year security yield after 4 years=r | ||||

Future Value of $1 investment for 6 year with sequential investment( 4 year now and 2year after 4 years=(1.057^4)*(1+r)^2=1.248245*(((1+r)^2)) | 1.248245 | |||

As Per Expectation theory, The Future values will be same | ||||

1.248245*((1+r)^2)=1.526154 | ||||

((1+r)^2)= | 1.222639 | |||

1+r= | 1.10573 | |||

r=0.10573 | ||||

2 year security yield after 4 years=10.57% | ||||

USING GEOMETRIC AVERAGE; | ||||

Geometric Average yield by sequential invetment | ||||

((1.057^4)*((1+r)^2))^(1/6))-1=0.073 | ||||

(1.057^4)*((1+r)^2)=1.073^6= | 1.526154 | |||

((1+r)^2)= | 1.222639 | |||

r=0.10573 | ||||

2 year security yield after 4 years=10.57% | ||||

EXPECTATIONS THEORY Interest rates on 4-year Treasury securities
are currently 6.2%, while 6-year Treasury securities yield 7.65%.
If the pure expectations theory is correct, what does the market
believe that 2-year securities will be yielding 4 years from now?
Calculate the yield using a geometric average. Do not round your
intermediate calculations. Round your answer to two decimal places.
%

Interest rates on 4-year Treasury securities are currently 6.9%,
while 6-year Treasury securities yield 7.8%. The data has been
collected in the Microsoft Excel Online file below. Open the
spreadsheet and perform the required analysis to answer the
question below.
Open spreadsheet
If the pure expectations theory is correct, what does the market
believe that 2-year securities will be yielding 4 years from now?
Calculate the yield using a geometric average. Do not round your
intermediate calculations. Round your answer...

Interest rates on 4-year Treasury securities are currently 6.4%,
while 6-year Treasury securities yield 7.4%. The data has been
collected in the Microsoft Excel Online file below. Open the
spreadsheet and perform the required analysis to answer the
question below.
Expectations Theory
4-yr.
Treasury security yield
6.40%
6-yr.
Treasury security yield
7.40%
Algebraic solution:
Total
return earned on 6-year securities
Total
return earned on 4-year securities
Yield on
2-yr. securities, 4 years from now
Geometric solution:
1 +
Total return...

Problem 6-8
Expectations Theory
Interest rates on 4-year Treasury securities are currently
6.15%, while 6-year Treasury securities yield 7.85%. If the pure
expectations theory is correct, what does the market believe that
2-year securities will be yielding 4 years from now? Round your
answer to two decimal places.

How would I put this in a financial calculator?
EXPECTATIONS THEORY
Interest rates on 4-year Treasury securities are currently 6.8%,
while 6-year Treasury securities yield 7.95%. If the pure
expectations theory is correct, what does the market believe that
2-year securities will be yielding 4 years from now? Calculate the
yield using a geometric average. Do not round your intermediate
calculations. Round your answer to two decimal places.
EXPECTATIONS THEORY
One-year Treasury securities yield 2.3%. The market anticipates
that 1...

Interest rates on 3 year treasury securities are currently 5%,
while 5 year treasury securities yield 8%. If the pure expectations
theory is correct what does the market believe that 2 year
securities will be yielding 3 years from now? Answer to
the nearest hundredth of a percent as in xx.xx% and enter without
the percent sign.

Interest rates on 3-year Treasury securities are currently
1.92%, while 10-year Treasury securities yield 5.62%. If the pure
expectations theory is correct, what does the market believe that
7-year Treasury securities will be yielding 3 years from now? a.
4.03 percent b. 3.70 percent c. 7.21 percent d. 6.04 percent e.
7.58 percent

Question 1.)
One-year Treasury securities yield 4.55%. The market anticipates
that 1 year from now, 1-year Treasury securities will yield 5.7%.
If the pure expectations theory is correct, what is the yield today
for 2-year Treasury securities? Calculate the yield using a
geometric average. Do not round your intermediate calculations.
Round your answer to two decimal places.
Question 2.)
A Treasury bond that matures in 10 years has a yield of 5.25%. A
10-year corporate bond has a yield of...

EXPECTATIONS
THEORY
One-year Treasury
securities yield 3.65%. The market anticipates that 1 year from
now, 1-year Treasury securities will yield 5.55%. If the pure
expectations theory is correct, what is the yield today for 2-year
Treasury securities? Calculate the yield using a geometric average.
Do not round your intermediate calculations. Round your answer to
two decimal places.
___%
EXPECTED
INTEREST RATE
The real risk-free
rate is 2.45%. Inflation is expected to be 3.25% this year, 3.6%
next year, and 2.2%...

PURE EXPECTATIONS THEORY The yield on 1-year Treasury securities
is 6%, 2-year securities yield 6 2%, 3-year securities yield 6 3%,
and 4-year securities yield 6 5%. There is no maturity risk
premium. Using expectations theory and geometric averages, forecast
the yields on the following securities: a. A 1-year security, 1
year from now b. A 1-year security, 2 years from now c. A 2-year
security, 1 year from now d. A 3-year security, 1 year from now

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