Question

what is the typical relationship among interest rates on three-month Treasury bills, long term Treasury bonds...

what is the typical relationship among interest rates on three-month Treasury bills, long term Treasury bonds and Baa corporate bonds

Homework Answers

Answer #1

The typical interest rates range of a particular country depends on various macro economic factors. All such factors generally drive the value that corporates or govt can pay and would want to pay for their borrowings. If these institutions have no dearth of people giving them loan at a particular interest rate then the interest rate would come down till it finds a balance again between demand and supply. Having said that, short term and longterm rates should move in the same direction albeit at a different rates

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
what is the typical relationship between interest-rates on three-month Treasury bills, long-term Treasury bonds, and Baa...
what is the typical relationship between interest-rates on three-month Treasury bills, long-term Treasury bonds, and Baa corporate bonds? And based on these charts, what kind of interest rate structures that we can get?
1-What is the typical relationship between interest rate on three-month Treasury bills and on interest rate...
1-What is the typical relationship between interest rate on three-month Treasury bills and on interest rate on corporate bond and growth rate of money supply. 2- If history repeat itself and we see a decline in the rate of money growth, what might you expect to happen to Budget deficit The inflation rate 3- How does an increase in the value of the Israeli shekel affect American business 4- Some economist suspect that one of the reasons that economies in...
1-What is the typical relationship between interest rate on three-month Treasury bills and on interest rate...
1-What is the typical relationship between interest rate on three-month Treasury bills and on interest rate on corporate bond and growth rate of money supply. 2- If history repeat itself and we see a decline in the rate of money growth, what might you expect to happen to Budget deficit The inflation rate 3- How does an increase in the value of the Israeli shekel affect American business 4- Some economist suspect that one of the reasons that economies in...
Historical average returns for Large Company Common Stocks, Long Term Government Bonds, and US Treasury Bills...
Historical average returns for Large Company Common Stocks, Long Term Government Bonds, and US Treasury Bills for the period 10-year period of 1999 through 2008 are shown in the following table. Use these data to solve the next several problems. Year Large Common Stock Long Term Government Bonds US Treasury Bills 1999 0.2104 -0.0751 0.0480 2000 -0.0910 0.1722 0.0598 2001 -0.1189 0.0551 0.0333 2002 -0.2210 0.1515 0.0161 2003 0.2889 0.0201 0.0094 2004 0.1088 0.0812 0.0114 2005 0.0491 0.0689 0.0279 2006...
How the bond market reacts when the Federal Reserve increases short-term interest rates? How do short-term...
How the bond market reacts when the Federal Reserve increases short-term interest rates? How do short-term versus long-term bond prices react? How do Treasury bonds versus corporate bonds behave? Describe the relationship between interest rate changes and bond prices.
Long-term (nominal) U.S. Treasury Bonds ------------ in the short-to-medium term. Short-term (nominal) U.S. T-Bills ----------  in the...
Long-term (nominal) U.S. Treasury Bonds ------------ in the short-to-medium term. Short-term (nominal) U.S. T-Bills ----------  in the short-to-medium term. U.S. stocks ----------  in the short-to-medium term. Options for blanks: Provide no/zero protection against inflation Provide good protection against inflation Are exported to inflation Suppose that your investment strategy is to buy a 15-year Treasury Inflation Protected Security (TIPS), hold it for 1 year, then sell it and buy another 15-year TIPS. You plan to repeat this process until you retire (in 45...
U.S. Treasury issues three types of Treasury securities: Treasury bills (T-bills), Treasury notes (T-notes), and Treasury...
U.S. Treasury issues three types of Treasury securities: Treasury bills (T-bills), Treasury notes (T-notes), and Treasury bonds (T-bonds).  The time to maturity (TTM) of T-bills is 12-month or less than 12-month.  The TTM of T-notes is between 1 year and 10 years.  The TTM of T-bonds is longer than 10 years.  Which one(s) (T-bills, T-notes, or T-bonds) belong to the money market instrument(s)?  Which one(s) belong to the capital market instrument(s)?  If you would like to buy Treasury securities, which...
historical returns. Calculate the arithmetic average return of U.S. treasury bills, long-term government bonds, and large-company...
historical returns. Calculate the arithmetic average return of U.S. treasury bills, long-term government bonds, and large-company stocks for 1987 to 1996. which had the highest return? which had the lowest return?
Are long term bonds always a better investment because their interest rates are higher
Are long term bonds always a better investment because their interest rates are higher
Although long-term bonds are heavily exposed to interest rate risk, short-term T-bills are heavily exposed to...
Although long-term bonds are heavily exposed to interest rate risk, short-term T-bills are heavily exposed to reinvestment risk. The maturity risk premium reflects the net effects of those two opposing forces. Explain.