Question

The Wall Street Journal reports that the rate on 9-year Treasury securities is 6.85 percent and the rate on 10-year Treasury securities is 7.15 percent. The 1-year risk-free rate expected in nine years is, E(10r1), is 7.75 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the 10-year Treasury security, L10? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Answer #1

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The Wall Street Journal reports that the rate on three-year
Treasury securities is 2.53 percent and the rate on four-year
Treasury securities is 2.74 percent. The one-year interest rate
expected in three years, E(4r1), is 3.22 percent. According to the
liquidity premium hypotheses, what is the liquidity premium on the
four-year Treasury security, L4?

The Wall Street Journal reports that the rate on 5-year
Treasury securities is 1.80 percent and the rate on 6-year Treasury
securities is 2.35 percent. According to the unbiased expectations
theories, what does the market expect the 1-year Treasury rate to
be five years from today,
E(6r1)?
What is the treasury rate Percentage %

The Wall Street Journal reports that the current rate on 5-year
Treasury bonds is 2.60 percent and on 10-year Treasury bonds is
4.85 percent. Assume that the maturity risk premium is zero.
Calculate the expected rate on a 5-year Treasury bond purchased
five years from today, E(5r5). (Do not round intermediate
calculations and round your answer to 2 decimal places.)
Expected rate %

Determinants of Interest Rate for Individual
Securities The Wall Street Journal reports that
the rate on 3-year Treasury securities is 7.90 percent, and the
6-year Treasury rate is 8.15 percent. From discussions with your
broker, you have determined that expected inflation premium is 3.40
percent next year, 3.65 percent in Year 2, and 3.85 percent in Year
3 and beyond. Further, you expect that real interest rates will be
3.95 percent annually for the foreseeable future. What is the
maturity...

Determinants of Interest Rates for Individual Securities The
Wall Street Journal reports that the current rate on 10-year
Treasury bonds is 3.25 percent and on 20-year Treasury bonds is
5.50 percent. Assume that the maturity risk premium is zero.
Calculate the expected rate on a 10-year Treasury bond purchased
ten years from today, E(10r10).

You read in The Wall Street Journal that 30-day T-bills
are currently yielding 4.5%. Your brother-in-law, a broker at Safe
and Sound Securities, has given you the following estimates of
current interest rate premiums:
Inflation premium = 3.00%
Liquidity premium = 0.6%
Maturity risk premium = 2.00%
Default risk premium = 2.00%
On the basis of these data, what is the real risk-free rate of
return? Round your answer to two decimal places.
The real risk-free rate is 2.25%. Inflation...

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...

A 5-year Treasury bond has a 4.4% yield. A 10-year Treasury bond
yields 6.85%, and a 10-year corporate bond yields 8.4%. The market
expects that inflation will average 1.5% over the next 10 years
(IP10 = 1.5%). Assume that there is no maturity risk
premium (MRP = 0) and that the annual real risk-free rate, r*, will
remain constant over the next 10 years. (Hint: Remember that the
default risk premium and the liquidity premium are zero for
Treasury securities:...

1- A particular security’s equilibrium rate of return is 8
percent. For all securities, the inflation risk premium is 3.35
percent and the real risk-free rate is 2.2 percent. The security’s
liquidity risk premium is 0.55 percent and maturity risk premium is
0.85 percent. The security has no special covenants. Calculate the
security’s default risk premium. (Round your answer to 2
decimal places. (e.g., 32.16))
Default risk premium %
2- Suppose we observe the following rates:
1R1 = 5.2%,
1R2...

A recent edition of The Wall Street Journal reported interest
rates of 7.2 percent, 7.55 percent, 7.85 percent, and 7.95 percent
for three-year, four-year, five-year, and six-year Treasury notes,
respectively. According to the unbiased expectations theory, what
are the expected one-year rates for years 4, 5, and 6 (i.e., what
are 4f1, 5f1, and 6f1)? (Do not round intermediate calculations.
Round your answers to 2 decimal places. (e.g., 32.16))

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